AI: Scepticism’s turn
The last week has seen AI sceptics jumping up and down about a coming crash, but Richard Windsor sees them citing data that is misleading. One reason was the MIT study, which claimed that 95% of AI projects failed to yield benefits, but the report also said that great benefits can come when such projects are implemented correctly. So, the sceptics may be wrong, but not nearly as wrong as those who believe superintelligent machines are soon to be among us. Richard sees the idea of $200bn/yr in revenue for OpenAI by 2030 as preposterous, and sees a correction coming, but it won’t be a crash on the scale as the AI sceptics claim. Hyper valued companies burning through money will get into real trouble, but the picks and shovels like Nvidia, Nebius, Micron, SK Hynix, Samsung and Qualcomm and so on are likely to continue to do well. Richard continues to hold the latter two.
Edition: 221
- 03 October, 2025
Technology
Richard Windsor argues SoftBank’s $2bn investment in INTC, alongside a potential 10% US government stake, may keep the company alive but does little to resolve its strategic paralysis. INTC faces a stark choice: either invest heavily to catch up with TSMC or break up the business - yet under new CEO Mr. Tan, neither path is clear. The board abandoned Pat Gelsinger’s catch-up strategy due to mounting costs, leaving INTC exposed to further share losses in PCs (to AMD and Qualcomm) and in data centres (to Nvidia and AMD). Richard warns that without decisive strategy, customer confidence will erode, competitors will gain share with ease and capital injections alone cannot avert decline. He sees no attractive entry point in INTC shares.
Edition: 218
- 22 August, 2025
Technology
Richard Windsor says MediaTek’s Kompanio Ultra chip sets a new standard for the high end of the Chromebook market and looks to be merely a stone’s throw from Intel and Advanced Micro Devices facing another newcomer in the PC Market. The biggest winner will be Arm, which will see its penetration of PCs accelerate and it will earn higher royalties from MediaTek which buys the processor design and licences the IP. This is neutral for Qualcomm because competition in this space is healthy and will keep the firm on its toes and push it to continue to lead when it comes to performance. INTC and AMD are the real losers here as the x86 architecture looks increasingly obsolete.
Edition: 209
- 18 April, 2025
Technology
The “ouster” of Pat Gelsinger will almost certainly result in INTC being split up, meaning the once all-powerful brand may soon be just a memory. With the company’s future very uncertain and its once great engineering culture in poor shape, INTC is easy pickings for its resurgent competition. Richard Windsor expects to see Qualcomm, AMD and MediaTek redouble their efforts in PCs and the data centre. He has often said that at 10x earnings, one should shut one’s eyes and buy the stock, but because of the falling EPS estimate the valuation has never gotten there. With the company in this much trouble, there is no price at which he would want to buy it.
Edition: 201
- 13 December, 2024
AI: At the edge
Now that LLMs are starting to show the limits of their performance, as Richard Windsor has long predicted, attention is starting to turn to use cases of running inference at the edge of the network as opposed to in the cloud. There are multiple reasons why it’ll come out on top, but economics is the main driver – companies won’t have to pay for all of the cost of running cloud services. The Edge AI Ecosystem is currently in the early stages of being built, which is the offering that chipset providers will make to developers in terms of making it easy to run their models on hardware. At the moment, Qualcomm is leading but others are chasing. Richard continues to own the stock and exposure to the nuclear fuel industry as the best long-term way to play the AI theme without being forced to pay for bubble-like prices.
Edition: 199
- 15 November, 2024
AI: The disconnect
Richard Windsor suspects that genAI services make up only a tiny percentage of the revenue in companies like Alphabet, despite massive investments. This is a more serious problem than the overinvestment in internet capacity in 1999-2000 because the dark fibre sat there until it was needed. In contrast, AI technology evolves so rapidly that it could become obsolete by the time it's needed. 2020 was supposed to be the year of realised AI revenue, yet there is little sign of this—Richard’s research concludes an absurd going rate of 142x revenue to sales. He remains content with his AI adjacencies of interference at the edge, where he owns Qualcomm, nuclear power, and a basket of physical uranium funds, ETFs, and uranium miners.
Edition: 191
- 26 July, 2024
AI: Artificially Inflated
The market is currently valuing revenues from AI at 150x for 2024, which is clearly unsustainable. A significant reset will come soon, with only the big digital ecosystems surviving. Nvidia remains the exception, with a far more reasonable valuation that will result in a much calmer correction when the time comes. Richard Windsor prefers to look more laterally where there is more value to be had. One of these lateral arcs is nuclear power which is going to be needed to power all the data centres and another is inference at the edge (which Microsoft has just championed) where Qualcomm and MediaTek are likely to be the big players.
Edition: 187
- 31 May, 2024
Technology
Preliminary results from Samsung combined with TSMC’s monthly revenue disclosure gives Richard Windsor increased confidence that the inventory correction has come to an end. Of all the component suppliers, QCOM is now trading at the bottom of its peer group in terms of PER ratio which demonstrates just how short-term the market thinks. There is no end in sight to its sales of 5G modems to Apple, it is winning enough deals in automotive to seriously disturb Mobileye and it is very well positioned for the Metaverse when or if it takes off. From a long-term valuation perspective, the shares are on sale.
Edition: 171
- 13 October, 2023
Technology
Despite FY23's difficulties, Qualcomm appears poised for positive growth, improved margins, and a favorable risk/reward scenario, supported by a $149 price target and 34% implied upside. The anticipated Nuvia-based CPUs launching in FY24 could drive expansion into new markets. Restructuring possibilities, IoT and Auto division growth, and AI strategy enhancement also offer real growth potential.
Edition: 168
- 01 September, 2023
Connectivity, speed & scale combine to blow up IT as we know it
Technology
In John Harrington’s latest Tech Trends report, he looks at several factors that have combined to change IT development and sales dynamics. These include how the accelerating deployment of speedier wired and wireless connectivity to the cloud, very fast computing platforms being built at scale within the clouds, the accelerating development of quantum computing as a viable commercial business, and the development of serious AI capabilities are affecting the global digital landscape. As IT increasingly transitions from in-house networking to the cloud, some new areas of IT will benefit, while others face an uncertain future.
Positive: Advanced Micro Devices, Alphabet, Apple, Amazon, Broadcom, Ciena, Dycom, Intel, IonQ, Microsoft, Nvidia, Rigetti.
Negative: C3.ai, Cisco, Dell, Qualcomm, Salesforce.
Edition: 162
- 09 June, 2023
Technology
Inflection Point Research, LLC
China contagion has spread to the US as IPR’s carrier, retail, and supplier checks indicate iPhone 14 sell-through continues to soften, coming in below expected demand for Apr. IPR believes AAPL’s planned test equipment purchases from Keysight, LitePoint and Anritsu were cancelled or delayed, suggesting slower production looking into 2H23. RF component purchases from Qualcomm, Cirrus, Broadcom, Skyworks and Qorvo have been trimmed, reflecting weakening demand. AAPL's Q3 hardware sales typically drop about -9% Q/Q, but IPR believes iPhone 14 could see declines closer to -20%. The iPhone 15 could also prove disappointing.
Edition: 161
- 26 May, 2023
Technology
Management's gross margin guidance is overly optimistic - Qualcomm's aggressive pricing strategy has left MediaTek in a difficult position between protecting margins and not losing market share. Post 4Q22 results, AceCamp lowers their 2023/24 EPS estimates to NT$50.6/NT$44.3 (-32%/-13% y/y), to reflect weaker than expected 1Q23 revenue guidance and higher than expected OPEX guidance. The stock currently trades at 14.4x/16.5x 2023/24 PE, following a 40% rebound from the 3Q22 low. However, given the significant EPS declines forecast and an environment of lukewarm smartphone recovery, a 12-13x PE would be more appropriate.
Edition: 154
- 17 February, 2023
Technology
Inflection Point Research, LLC
IPR’s industry checks indicate a recent significant change in AAPL procurement - order cuts have been made across the board, including iPhones, Macs, iPads, Watches, and accessories. It is likely to take some time for supply and demand to normalise causing problems for suppliers in the near term. In a separate note, IPR also discusses the recent Bloomberg report re. AAPL's plans to replace Qualcomm and Broadcom iPhone chips with in-house solutions. IPR believes this is just the first round of a negotiation dance between Tim Cook and Hock Tan, that will ultimately lead to another LTSA.
Edition: 152
- 20 January, 2023
Renault (RNO FP) France
Consumer Discretionary
Finally lets Google off the leash - after four years of procrastination, the French car manufacturer has decided that its long-term future in EVs is not to do the software itself. It is the first major OEM to go in this direction and it is going to need to gain some market share to offset the impact of ceding the customer relationship to Google. Given the mess that the rest are in and how important the software user experience is becoming in the vehicle, this might just work for RNO. Qualcomm is also a winner here as RNO appears to be taking the whole QCOM digital chassis offering.
Edition: 148
- 11 November, 2022
Telecommunications - Semiconductor Devices
Showing signs of executing on its automotive ambitions with a 57% increase in its design win pipeline in the last 3 months, as well as a clear view of exactly how it is addressing the vehicle opportunity. The flagship automotive product is referred to as the Snapdragon Digital Chassis which, at its heart, is a semiconductor and software offering that will power driver assistance all the way to full autonomy, the vehicle cockpit and infotainment. This goes alongside all of the usual connectivity chips that Qualcomm has been dominating for years and is so far the biggest expansion outside of its historical core competence.
Edition: 145
- 30 September, 2022
Technology
Poor results and weak guidance - this is more about execution than the economy. Instead of 2023 EPS being c.$3.75 (PER 9.6x), EPS is now likely to be $2.00 to $2.25. This (again) brings down the “shut your eyes and buy it” moment from $36 per share to $20. INTC is no longer a value stock as its earnings have evaporated and one must now look through to the recovery. Although this is far from certain as Richard Windsor still has concerns re. the longevity of the x86 processor design and INTC’s financial strength is weakening fast. Qualcomm, MediaTek, and TSMC remain far better places to be in the semiconductor sector at the moment.
Edition: 141
- 05 August, 2022
In-house modem development is tougher than it looks
Inflection Point Research, LLC
The blogosphere continues to buzz that Apple's in-house modem will not ship in 2023 and the iPhone 15 will ship with 100% Qualcomm silicon - while Michael Fox does not believe AAPL has “failed”, it is proving to be more difficult than Johny Srouji and his team anticipated. AAPL highly unlikely to risk all-important iPhone franchise on first-generation internal silicon; will begin the switch with iPads / Macbooks which have simpler use models. As with AAPL, Samsung continues to struggle with its LSI modem. Despite years of experience with developing / shipping in-house modems, design flaws could push the company to ship all 2023 Galaxy S models with QCOM modems.
Edition: 140
- 22 July, 2022
Technology
The strangest profit warning - Richard Windsor questions the validity of MSFT’s claim that USD strength is to blame and sees a difficult quarter ahead. Looking at the wider Technology sector, he notes that while many stocks have already fallen by 70%+ they could easily halve again. Stick with the value end of the sector and semis in particular. He favours Qualcomm, TSMC and MediaTek as companies with reasonable growth ahead, strong positions in their markets as well as valuations that are less than 15x 2022 PER.
Edition: 137
- 10 June, 2022
Technology
Smartphone sector China demand risks are still not fully appreciated - consensus believes the premium end of smartphones will outperform the overall smartphone market, as they did in 2021. However, Lynx believes that this year, it will be the low-end of the price spectrum that outperforms. Ultra-low-priced 5G models will flood the developed markets (especially the US). A shift away from high ASP models is not good news for QCOM. The degree of weakness at China brands is also being underestimated (QCOM is heavily exposed). Even in the iOS domain, QCOM’s downside has not been fully priced in; expects Apple iPhone shipment in FY22 to underwhelm investors.
Edition: 133
- 14 April, 2022
U-Blox Holding (UBXN SW) Switzerland
Technology
Current supply bottlenecks are only masking a more fundamental problem - UBXN's obsession with developing its own chips has led to an inflated cost base that does not sufficiently focus on areas where it can gain a competitive advantage. Research Partners see no signs that the company can defend its market share (highlights Chinese rival Quectel’s rapid growth and Qualcomm’s intentions to enter the automotive market), control operating costs, make its services business a success or is willing to revise its strategy. Downgrades to Sell.
Edition: 119
- 17 September, 2021
Event-Driven Legal℠ Investment-Research Opportunities
MDC’s “Event-Driven Legal℠” investment-research service follows significant legal disputes to provide clients with actionable investment ideas that tend to be non-correlated with the market. MDC has been providing its subscription “Event‐Driven Legal℠” investment‐research service since 2009. Typically, MDC keeps ~50 active cases on its Focus List and provides clients with breaking news/predictions during proceedings and analysis on important orders swiftly upon the Court publishing such information to its Docket. Current coverage includes: Amarin Pharma, Amgen, Biogen, Bristol-Myers Squibb, Catalyst Pharmaceuticals, Qualcomm, Renren and Xperi.
Edition: 116
- 06 August, 2021
China Handset Semi Checks
Technology
Westlake's report includes detailed analysis and data on semi shortages, handsets and components inventory and lead times - Qualcomm, MediaTek, Skyworks, Qorvo and Broadcom saw very strong pricing and better-than-guided 1Q demand at Chinese OEMs. Their OEM contacts also observed lower phone inventory in 1Q vs. 4Q, with some indicating 6-7% inventory-to-sales ratio (normal level is 10-12%). Based on fab wafer sizes and technology nodes, the most severe shortages were seen in basebands / SoCs, MCUs, CIS sensors, display ICs and PMICs.
Edition: 109
- 30 April, 2021