Fortnightly Publication Highlighting Latest Insights From IRF Providers
Company Research
Navitas stock surge masks growing execution crisis in AI power market
Technology
JNK Supply Chain Research reveals serious problems hiding beneath the surface as NVTS transitions chip production from TSMC to PSMC. The new factory has lower quality standards and worse yields. Critical 650V GaN devices won't reach mass production until late 2026 or early 2027. Competitor Infineon already ships 800V power solutions to AI data centres. NVTS remains in development while the market moves forward. Big customers like NVIDIA are diversifying suppliers instead of depending on NVTS. The company has few shipping products in hyperscale AI infrastructure. NVTS pioneered GaN technology with 250 million units shipped. But execution matters more than innovation when competitors deliver working products first. NVTS is one of 23 companies JNK tracks in the analog space. Click here for recent results.
Edition: 223
- 31 October, 2025
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
Nvidia's circular financing
Technology
Veritas has been flagging NVDA’s customer financing activities well before they hit the headlines: in 2023, they first highlighted the issue in “Nvidia & The Tech Sector's Circular Cash Flows” and reiterated their concerns earlier this year in “Nvidia’s CoreWeave - A Familiar Story”. Following the Oracle/OpenAI deal, the sell side is now echoing Veritas’ warnings, drawing parallels to the dotcom bubble, when Nortel, Lucent and Cisco extended credit to customers to enable their internet infrastructure buildout. Veritas does not expect this risk to be priced into NVDA's stock until revenue growth slows. If investors doubt customers can generate returns on their chip investments, these large negative cash flow purchases will not be well received.
Edition: 221
- 03 October, 2025
Overlooked opportunities in YWR’s QARV rankings
Why do China, shipping, iron ore, hardware, Brazil… all stand out if you screen high ROE’s with low valuation? Erik@YWR sees it as scepticism about global growth on which he is taking a contrarian view. Following this month’s review of YWR’s QARV rankings key themes include: 1) A massive China bull market has only just begun. 2) Opportunities in iron ore, where Fortescue, Rio Tinto and Kumba are delivering ~20% ROEs at <12x P/E despite China’s property crash. 3) The Taiwanese semiconductor supply chain stands out as highly profitable and undervalued. Everyone focuses on Nvidia and the datacentre buildout but misses the whole Taiwanese supply chain behind this. Tokyo Electron and ASML also screen well. 4) Brazil is overlooked, with names like Itau, Vale, Ambev and B3 all screening well. 5) Container shipping - supply-chain diversification could sustain tighter freight rates than investors expect.
Edition: 220
- 19 September, 2025
Technology
Nvidia’s coding momentum is weakening, raising concerns about its AI dominance. Once a leader in developer mindshare across GitHub, StackOverflow, searches, and job postings, its trends have declined sharply in 2025, ranking near the bottom of 150 stocks. This signals a potential headwind for sales, though hyperscaler-driven revenues limit direct correlation. More importantly, the trend reveals structural risks: developers are shifting from Nvidia’s proprietary CUDA toward hardware-agnostic frameworks like PyTorch, TensorFlow, and JAX, which run across AMD, Google TPUs, and others. With optimised kernels reducing Nvidia’s software edge, the erosion of developer focus may undermine long-term competitive strength.
Edition: 219
- 05 September, 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
Hot picks for the heat economy
Heat pumps are the go-to solution for building space cooling (and heating), and the Sustainable Market Strategies team expect the bull market in HVAC companies to continue even in the face of subsidy removals. The IEA expects 1.5bn more air conditioners in operation in 2025 than today, driving the need for energy efficient solutions. Heat pump improvements aren’t just good for reducing emissions, they’ve been good for portfolio returns; just take a look at Comfort Systems, which some could mistake for super star Nvidia (see chart). Sure, this performance does stand out among HVAC players, but others have also done well (see table). The tech will become only more important in use cases like food refrigeration and data centre cooling, so demand will see sufficient growth. When it comes to cooling solutions for the data centre boom, look to US companies to fill this gap.
Edition: 218
- 22 August, 2025
Technology
Despite a solid Q3 beat and raise, MU shares fell on misplaced concerns over HBM oversupply. Arete sees strong FY26 growth, with HBM projected to reach ~40% of DRAM sales by late 2026, reinforcing MU’s status as an essential yet still undervalued AI stock. Nvidia continues to request additional HBM and potential resumption of H20E (with HBM3E-8Hi) sales could act as a catalyst for further global supply tightening. MU must demonstrate HBM4 competitiveness (16-layer stacking capability) within 6-8 months to ease investor concerns. Arete also expects MU to gain eSSD market share at the expense of Samsung and SK Hynix. A combination of stable traditional DRAM pricing and rising HBM mix to drive a 63% Y/Y rise in FY26 EPS to $12.78. TP increased to $150 (35% upside).
Edition: 216
- 25 July, 2025
What happens when retail investors wake up?
The April-July rally was driven by the perception that the tariff war was over. Since then, retail investors have flooded the stock market with reckless inflows, remarks Michael Belkin. The IG stock market betting site registered 100% of investors being long this past weekend, which he has never seen before. Tariff rates have further to go, and this will be incredibly bearish for the stock market. Corporate insiders (like NVIDIA) are already selling shares, unloading into the unsuspecting hands of retail and institutional investors. Michael says it is clear that we are in a bubble, but many refuse to see it. Defensive sectors have a coiled spring forecast and a long-term model outperform forecast, but Michael’s top picks are gold and energy stocks, including Newmont and Barrick.
Edition: 215
- 11 July, 2025
Technology
Channel feedback on BOX is turning decisively more positive, according to Sales Pulse Research. BOX has built a strong reputation as an enterprise-grade file storage and content management platform, offering superior security, scalability and cost efficiency vs. OneDrive and Dropbox. The company is well positioned to benefit from AI adoption and growing unstructured data. Its partnership with Nvidia has enhanced Box AI, enabling more powerful and secure enterprise automation. Partners note BOX’s strong integrations, governance tools and alignment with cybersecurity platforms. Several now lead with BOX over traditional solutions, citing better incentives and opportunities for services-led engagements.
Edition: 214
- 27 June, 2025
Communications
NBIS plans to establish a data centre in the UK just a week after raising $1bn via a convertible debt offering, underscoring its accelerated capital expenditure strategy. The announcement coincided with media reports of Nvidia's plans to invest in the UK. The growing availability of Blackwells should benefit revenue mix as the year progresses. Hamed Khorsand forecasts revenue to grow from $55.3m in 1Q25 to $292.2m in Q4 for a full year amount of $607.8m. He expects revenue to reach ~$1.5bn in 2026 with NBIS generating adjusted EBITDA of $379.1m. Reflecting this outlook, he raises his target price from $60 to $80, with the shares already up ~80% since his Jan 2025 initiation.
Edition: 214
- 27 June, 2025
Consumer Staples
Scott Muskin sees WMT as the “Nvidia of Retail” and explains why its equity could be worth a remarkable $250 per share. The upside is grounded in a powerful multi-year strategy driving accelerating earnings growth, supported by automation, expanding e-commerce profitability, surging advertising income, Walmart+ and improving sales mix. Scott draws bullish parallels to his experience in covering Amazon and its journey around enhancing profitability over the last 12+ months, as well as developing a WMT 2034 financial model similar to what he did to appraise AMZN's potential in its North American business. Fixing the “fresh” food offering through improved quality, delivery and in-store experience is also flagged as a critical catalyst for driving frequency, market share gains and a broader halo effect across the entire business.
Edition: 214
- 27 June, 2025
“Baby With The Bathwater” Idea Forum
Given the sharp shift toward macro dynamics, MYST hosted a generalist idea event to identify companies that have been overly penalised amid the recent downturn. All but one of the participants felt the market may hit new lows (S&P 500 ~4,500) as consensus earnings estimates are likely too high. While most of the stocks presented were not far from their 52-week (or much longer) lows, participants highlighted companies with underappreciated earnings resilience (Byrna Technologies, CCC Intelligent Solutions, Six Flags, IMAX, Nvidia) and businesses misperceived as Trump tariff / DOGE losers (Aptiv, KBR, SharkNinja). However, the stock offering the biggest upside (100%+) was Chart Industries (LNG export policy beneficiary with rising recurring revenue / improving leverage profile).
Edition: 210
- 02 May, 2025
Nvidia’s China outlook clouded by US policy risks
Technology
At a time when the market assumed a “grand deal” had been struck between Trump and NVDA, a twist in events again surprised investors with a de facto ban on H20 exports. Meanwhile, Jensen Huang’s visit to China this week appears to continue earning goodwill from Chinese authorities, but ultimately, the company’s future in China lies in the hands of Washington. 86Research takes the cautious view that there is a high probability a full chip embargo will remain in place, even if the two countries eventually reach reconciliation on the tariff front. Given this assumption, the downside risk from an almost total loss of China revenue is likely still not fully priced in.
Edition: 209
- 18 April, 2025
Communications
NBIS, the non-Russian assets of what was formerly known as Yandex, started trading on the NASDAQ without much market awareness in Oct 24. The group has been adding GPUs at a rapid pace to keep up with demand, resulting in management raising its 2025 ARR guidance last month. NBIS has accelerated its growth ambitions with capital expenditures in 4Q24 that should translate into higher revenue in 2025 ($692m vs. $137.7m in 2024). The stock has begun to reflect its association with AI since Nvidia participated in an equity financing round last year, but Hamed Khorsand continues to see significant upside.
Edition: 203
- 24 January, 2025
Energy
Strong demand for LNG is the foundation for EE’s growth potential - it has minimum contracted sales under time charter and terminal use contracts of more than $4bn, equal to c.120% of the company’s $3.4bn enterprise value. KCR sees tremendous upside via the company’s expanding asset base and superb capital allocation. There seems to be a daily article regarding a breakthrough in AI, the chips, the software etc., they see no such proliferation of new competition in LNG FSRUs…is it possible EE has a more durable moat than Nvidia?
Edition: 203
- 24 January, 2025
Big Tech: Asia vs. US - Samsung spoils the chase
Technology
2024 was a banner year for mega-cap US Tech companies, with Apple, Nvidia, Microsoft, Amazon and Meta rising a collective +64%. Were it not for Samsung Electronics crashing -41%, Asia’s mega-cap Tech companies (TSMC, Tencent, Samsung, Alibaba and Meituan) would have almost matched their US peers: +61% collective return (USD) without Samsung but +40% with Samsung. The good news: rolling into 2025, Crystal Shore has a positive risk rating on all 5 Asian Tech companies. Even Samsung.
Edition: 202
- 10 January, 2025
Technology
While revenue guidance was largely in line with Street expectations what caught investor attention was the "insane" margin outlook. TSMC is clearly doing a good job extracting value from Nvidia’s high margin AI business. The steady tone of management is likely to temper a surge in negative sentiment in response to ASML’s caution. There was no change to TSMC’s capex outlook, which ought to help investors return to the deeply sold-off Lam Research and Applied Materials. KC Rajkumar expects the stock to drift up, but not without volatility driven by investor concerns regarding sustainability of the AI rally and potential new restrictions on the export of AI chips. He raises his 2024 estimate to NT$2.87tn/NT$44.6 and 2025 estimate to NT$3.67tn/NT$56.7. TP NT$1250.
Edition: 197
- 18 October, 2024
Nvidia's H20 remains the top choice for Chinese CSPs
Technology
Based on Westlake’s conversations with industry experts, Chinese CSPs remain major customers for the H20 despite Chinese regulators’ guidelines. With speculation the DoC BIS will propose even stricter restrictions on advanced GPU exports to China at its annual review in Q4, Chinese CSPs and leading server ODMs / OEMs are stockpiling H20s in case of potential bans. Contacts estimate the H20 shipment units in China to be ~50k in Q2, ~350k in Q3 and ~400k in Q4, for a total ~800k units in '24. NVDA could potentially see H20 revenue reach $9bn-$9.8bn in 2H24. Chinese CSPs currently rely on NVDA’s GPUs including H20 for training, while deploying a variety of GPUs, e.g. Huawei’s 910B, for inference. Huawei’s Ascend 910B/910C shipments are estimated to grow from 100k-200k in ’23 to 350k-400k in ’24 and 650k-700k in ’25.
Edition: 196
- 04 October, 2024
AI: The race to the bottom
One would have expected Anthropic’s latest innovation to be part of its premium tier, but the fact it is free is a sign that the race to the bottom, kicked off by Meta, is already underway. Richard Windsor sees it as a sign that the company is struggling to attract users to its platform in an already competitive environment. There are still no signs of the promised superintelligence on the horizon. Current expectations and valuations are unrealistic, and we will likely see the reset begin in the venture capital space as start-ups fail to meet their targets and go back to their backers for more money. Against this backdrop, everyone is going to take a hit, but the least pain is likely to be felt by Nvidia and TSMC. Richard prefers adjacencies of inference at the edge and nuclear power as the best way to get exposure to AI.
Edition: 194
- 06 September, 2024
US: Recessionary signals
The Vermilion Research team’s long-term outlook remains neutral on the S&P 500 as of 6 August, after being bullish since early November 2023. The team sees the SPX and Nasdaq 100 as going through a 1- to 4-month pullback/consolidation period, with market dynamics remaining concerning, especially when considering the toppy price action in this bull market’s leaders (Nvidia / SMH) and a major breakdown in WTI crude oil. One of the most bearish things that can happen at this point is if the XLF, XLI, RSP, XLB, and Dow end up being false breakouts, which appears to be happening already with the latter two.
Edition: 194
- 06 September, 2024
Torrent Pharmaceuticals (TRP IN) India
Healthcare
Nvidia without the drawdowns - TRP has been one of the big success stories of India's stock market. Since 1st Jan 2000, the stock is up 7950% (USD). That compares to MSCI World Health Care (USD) up +650% and MSCI India (USD) up +725%. Crystal Shore purchased TRP in their weekly GTAsia Top 10 Stocks on 2nd Oct 2023. It has been their top performing position, delivering +72% over the past 11 months. Bank Jago Indonesia is their second highest scoring position, with a +33% return (USD) since their purchase just 6 weeks ago.
Edition: 194
- 06 September, 2024
Technology
Bad news comes in threes. First, there is a new-found realisation that AI returns are not keeping up with massive AI investments. Second, there are macro-related worries. And now third, a report emerged that NVDA’s Blackwell roll-out is being delayed due to “design flaws”. KC Rajkumar is not surprised. In a recent Micron note, he pointed to the potential for heating-related failures of the NVDA GPU-HBM module. His most recent checks now show that NVDA is likely to pause GPU wafer starts at TSMC until yield-issues are resolved. KC expects a hole appearing in NVDA’s 2FH25 product roll-out and revenue ramp. Estimate cuts are on the way. He is looking for the stock to head to the $80 level into the upcoming earnings call. Advanced Micro Devices, on the other hand, could end up being an accidental winner.
Edition: 192
- 09 August, 2024
Industrials
Given his recent supply chain checks and conversations with industry players, Felix Wang believes the company’s liquid cooling backlog and revenue expectations are too high. While supply bottlenecks are improving, he is particularly worried about some of the new liquid cooling technology out there. As a result, VRT's price-cost tailwinds of >$65m for FY24 may become harder to achieve. Felix also argues VRT's relationship with Nvidia is not really a game-changer and tracking new data centre construction he notes the pace has slowed in 2Q24. The stock looks very expensive at 34x FY25 P/E and 23x EV/EBITDA. While the long-term picture of liquid cooling is constructive for data centres, there is uncertainty on when / how it will play out. 35% downside.
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
Stock market rotation is gradually turning defensive
While Utilities outperformance is being attributed to greater energy demands of AI and EVs, many “boring” electric utilities without obvious AI potential are up DD % over the last few months (AES, Dominion Energy, PSEG). Furthermore, Consumer Staples has an early outperform forecast in Michael Belkin's proprietary times series analysis model - another risk-off signal. The AI and Tech obsession obscures a bigger trend: many Tech stocks are declining. The CLOU cloud software ETF is down -15% since early Feb. Former leading new-era disruptors are top Sell recommendations (Uber, Meta, Netflix). Even Nvidia remains a Sell and its biggest risk is something nobody is talking about: its chips are made in Taiwan.
Edition: 187
- 31 May, 2024
Apple Silicon in the Cloud
Technology
KC Rajkumar thinks through the implications of Apple potentially adapting its client-focused Apple Silicon for AI applications in its data centres. He reasons Apple Silicon in the cloud has several interesting advantages over incumbent Nvidia’s GPU solution. KC thinks the company is taking a major step to diversify away from its dependence on unit volume of Apple products and instead leverage its power-efficient Apple Silicon for delivery of lucrative Gen AI services. Servers based on Apple Silicon in the cloud could quarterback the delivery of Gen AI services to Apple’s c.2.2bn client devices. KC expects a gradual run-up in the stock into the WWDC event next month. TP $220.
Edition: 186
- 17 May, 2024
SOXX starting another leg higher
Technology
After a 17% pullback from the March high the iShares Semiconductor ETF (SOXX) is emerging from a consolidation phase and about to start another bullish leg higher. Guy Cerundolo scored the constituents of the SOXX and found 53% of the stocks with a bullish multi-factor model score. His top five scoring stocks are: Nvidia, Broadcom, KLA Corp, Applied Materials and Monolithic Power Systems. A full listing and chart review of the constituents is available on request.
Edition: 186
- 17 May, 2024
Communications
Galliano's Financials Research
The current share price discount to the stated NAV of 53% may seem optically attractive, but Victor Galliano believes this figure will be subject to valuation headwinds going forward. Arm (45% of SoftBank Group’s equity value) is starting to experience limits to its “growth at any price” stock status. It trades at super-premium valuations which are unsustainable, not least as Nvidia trades on less than half the prospective earnings multiple for just slightly lower forward consensus EPS growth. Furthermore, while the JPY’s depreciation is supportive of the group NAV, with the Fed’s hawkish stance well known and BoJ expected to raise interest rates, JPY weakness may be largely done.
Edition: 184
- 19 April, 2024
Should we listen to the central banks?
Investors are growing tired of central bank speak, which James Aitken claims to be performative exactitude peddled as transparency. If you’re in doubt about what’s happening in the world, listen instead to what your best-run portfolio companies are telling you and cross-reference with what you are actually observing. The recent price action – bonds falling more than stocks – could be interpreted as suggesting that despite rising long-end yields, markets are comfortable with strong, perhaps stronger growth to come. That will ensure the best-run companies protect moats & continue to grow earnings in a satisfactory way. Assuming nominal GDP continues to rumble along around 5-6%, bond yields should be higher, with 10yr treasuries soon yielding 5% or more, which will act as headwinds to some stocks that have seen the biggest rallies, such as Super Micro Computer Inc and Nvidia, with marginally profitable, levered businesses struggling. You cannot, however, be out of stocks let alone net bearish: you just need to own different things.
Edition: 184
- 19 April, 2024
Technology
EV/Sales multiple has doubled in the past year - Nvidia’s initial choice of FN to make 800G InfiniBand transceivers for its GPUs has led investors to perceive the company as a secular AI growth beneficiary. OWS thinks this is a misperception. Ethernet appears to be gaining on InfiniBand and is likely to supersede it as the standard AI networking technology. Competition for 800G+ transceivers for AI applications is likely to increase and lower FN 800G+ transceiver market share. Furthermore, widespread selling by insiders in the past few weeks suggests that they may not share bulls’ enthusiasm for the firm’s prospects. TP $131 (30% downside).
Edition: 183
- 05 April, 2024
Technology
The must-have name in the AI space - KC Rajkumar sees MU rivalling AMD’s market cap in the next 12-18 months. As KC predicted, MU blew away investor expectations, not merely by beating and raising quarterly numbers, but by providing a qualitative outlook for revenue / margins into Cy24 and Cy25 - unimaginably impressive for what is supposed to be a cyclical business. Not even Nvidia has been able provide a two-year outlook. Agnostic to AI chip suppliers, and increasingly a pure-play in AI, renders MU more attractive, at this stage in the investment cycle, to the likes of NVDA, AMD, Broadcom and Marvell.
Edition: 182
- 22 March, 2024
Technology
TSMC is enjoying renewed investor interest after its surprisingly strong Oct monthly sales. In KC Rajkumar’s view, the consensus bull thesis for 2024 - ASP increase as the 3nm node ramps, cyclical upturn in PC / smartphone - is inadequate. KC expects upside theme to TSMC’s consensus expectations next year includes significant 5nm demand from major cloud service providers - Microsoft’s newly unveiled AI accelerator chip and Amazon’s newly unveiled Graviton-4 CPU. Relative to Nvidia, KC believes TSMC is an inexpensive vehicle to invest in the AI theme as MSFT's internal AI program makes a major effort to find an alternative to NVDA’s GPU. TP NT$750 (30% upside).
Edition: 175
- 08 December, 2023
Technology
New Constructs uses their DCF model to illustrate the expectations baked into NVDA’s current stock price - sees 40% downside even with massive growth. To justify its current share price NVDA would have to immediately improve NOPAT margin to 38%; grow revenue by consensus in fiscal 2024 (101%) and 2025 (47%); and grow revenue 25% each year thereafter through fiscal 2038. This implies revenue hits $1.45trn, which is larger than Mexico’s GDP! Even if one assumes NVDA can maintain NOPAT margin at 35%; grow revenue by consensus in fiscal 2024 and 2025; and grow revenue by 20% each year thereafter through fiscal 2038, then the stock would be worth just $290 today.
Edition: 175
- 08 December, 2023
The Magnificent Seven
The impressive growth trajectory of the Mag 7 has been fuelled by AI and cloud computing, as money continues to chase their share prices higher despite pressure from rising bond yields on tech stocks’ long duration and their steep valuations compared to equity benchmarks. As pioneers in innovation, they are increasingly encountering legal challenges, but this has been intensifying as of late. The giants have a noteworthy presence in sustainable investment funds (see chart). However, the Sustainable Market Strategies team see the broad inclusion of these stocks as somewhat dubious. They tout Nvidia and Microsoft as the leaders, although the former is trading on a lot of AI hype and will fall short of growth expectations. Meanwhile, Amazon and Meta should be avoided as long positions in a sustainable strategy.
Edition: 173
- 10 November, 2023
Semiconductors: No H2 recovery as foundry outlook worsens
Technology
Q2 clearly marked a turning point in the global semiconductor downturn with four out of the eight key segments Ingenuity monitors showing sequential growth and another two (smartphone & server) just barely missing the cut. WFE and Foundry were the outliers with both showing sequential declines. However, before anyone gets too excited about this positive turn of events, it’s important to keep in mind that the y/y comparisons remain in the red across the board. Furthermore, while the silicon wafer and memory segments both showed positive sequential developments, their problems are far from over. Finally, TSMC’s deteriorating FY23 outlook, despite an ongoing Nvidia-driven boost, underscores the reality that there is no H2 rebound on the horizon.
Edition: 169
- 15 September, 2023
What is your exposure to AI?
Technology
In their 2023 outlooks last November, the top four equity firms overlooked AI in US equity investing. Yet, Nvidia's unprecedented forecasted revenue surge from 10% to 64% growth in May, the biggest ever for a mega cap stock, surprised due to AI's impact. AI's comparable significance to the 2000 internet boom makes it a pivotal market driver. Monitoring AI exposure is crucial for CIOs and CROs. From analyzing 180,000+ earnings transcripts, Trivariate identified AI keywords, forming a top 50 AI stock basket and a "Ex-AI" basket for comparison.
Edition: 168
- 01 September, 2023
Technology
Buy the dip even as AI momentum shows cracks - as the semis complex comes under pressure for all the right reasons (disappointments at Apple, loss of momentum in AI, analog inventory, China trade worries), KC Rajkumar believes (near-term) long ideas in semis have become harder to come by. However, he argues the Street has become too negative re. traditional servers and expects investors to gravitate towards AMD despite ongoing worries regarding share gain of its MI300. Over time, KC would not be surprised if up to a third of Microsoft’s AI servers come to be based on an AMD solution vs. the dominant share Nvidia currently enjoys.
Edition: 167
- 18 August, 2023
China is making AI the enemy
Beijing is rapidly bringing in new rules to restrain AI, having implemented ten significant regulations, three of them formative. It’s not necessarily a bad idea, but the guiding spirit is Communist Party information control; that does not bode well for innovation. Recent developments, including the panicked booking of $5bn worth of Nvidia chips by Chinese internet giants, suggest that the country is not leading in AI development. Tech companies across China are all investing in AI but have yet to show a revenue boost. As AI gets integrated into everything from travel to law, Chinese companies will be on the import, not the export, side of the equation.
Edition: 167
- 18 August, 2023
Technology
AceCamp now expects NVDA’s DGX server unit shipments to reach 3k in 2023 and 13k in 2024 (vs. previous estimates of 1-2k and 3-5k). They have revised up their EPS forecasts by 7%/20%/21% and now expect non-GAAP EPS to reach $8.9/$16.52/$20.65 in 2023/24/25. AceCamp’s EPS forecasts are 30-40% higher than consensus estimates and they expect the group's datacentre sales may reach $68.9bn in 2024, 50-60% higher than the street. NVDA is currently trading at 49x/26x/21x 2023/24/25 non-GAAP PE, but AceCamp believes the stock could trade at 35x 2024/25, implying 50-60% upside from current levels.
Edition: 164
- 07 July, 2023
Technology
As and when pricing of Gen AI applications become transparent to end users, standard ROI metrics will kick into place. Cost-down efforts will become inevitable in order to scale up the user base. NVDA’s ~$30k/chip pricing will not last into the next year, according to KC Rajkumar. He thinks once the novelty of the idea of Gen AI wears off and investors get familiar with alternatives to NVDA, there is powerful downside risks to the stock. KC models the data centre business in FY25 up 10% (vs. consensus up 25%) and overall GM/OM at 65%/45% (vs. consensus at 70%/52%). Even at a 50x multiple he gets a TP of $360 (vs. Street targets closer to $500).
Edition: 163
- 23 June, 2023
SK Hynix (000660 KS), Wiwynn (6669 TT), Carrier (CARR US) US
Technology / Industrials
Sean Maher takes a 110% profit on Japan's Advantest in his semi basket after the Nvidia inspired surge, but still thinks SK Hynix remains undervalued and the key high bandwidth memory play as AI inference explodes. Sean has added Taiwan’s server maker Wiwynn to his networking basket as a key play on booming demand through end decade for its lower power consumption / heat generation technologies in AI server clusters. Climate change and the energy transition also remain key themes, driving secular AC and heat pump demand; Carrier has been added to his transition basket on its M&A reinvention as a HVAC / heat pump pure play.
Edition: 162
- 09 June, 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
WPP (WPP LN) UK
Communications
Teams up with Nvidia to use generative AI to produce advertising at scale - Doug Arthur continues to like the moves of the new management at WPP, who are quietly right sizing the company, vastly improving the balance sheet and feeding interesting growth initiatives. This new partnership, among other facets, should allow WPP to replace costly aspect of ad production with an AI approach potentially vastly reducing time to market as well as costs. At Doug’s TP of £12.50 (45% upside), the stock would be trading at 6.7x estimated 2024 EBITDA and 11.3x adjusted EPS as well as 9x FCF.
Edition: 162
- 09 June, 2023
Artificial Intelligence: Look for the picks and shovels of this latest bubble
Technology
The popularity of ChatGPT and the technology press’ willingness to ignore the reality of what it is, has kickstarted an arms race where a series of huge but very dumb machines will be created to meet demand. Richard Windsor predicts crashing valuations, huge write-offs and another period of navel-gazing while the AI industry ponders what went wrong. This will be the 4th AI Winter. This does not mean that there is not money to be made but it will not be in the companies that are building these behemoths but in the companies that supply them (e.g. Nvidia and Advanced Micro Devices) who may well see a sudden surge in demand as this bubble gets underway.
Edition: 154
- 17 February, 2023
Technology
Inflection Point Research, LLC
NVDA's dominance in AI workloads, both in cloud computing infrastructure and other implementations, remains very much intact - Michael Fox believes the bevy of current start-ups will have a steep uphill climb to get any traction in high volume AI deployments (i.e. cloud), and while Advanced Micro Devices and Intel have competing solutions that look good on paper, both fall short in ecosystem and support. Ultimately, Michael expects the real competition for NVDA’s dominance will come from internal chip developments at the hyperscalers. Fortunately for NVDA, any true competition is years down the road.
Edition: 149
- 25 November, 2022
Technology
The FTC drops the hammer as it announces that it will be suing NVDA (and SoftBank) to block the acquisition of Arm - this is a significantly stronger move than any other regulator has made so far and the scale of the remedies required could end up destroying the value of the deal for NVDA. The simplest solution to SoftBank’s ownership of Arm is to put it back where it found it on the LSE. The problem here is that this deal is now worth $80bn to SoftBank thanks to the blistering rally in NVDA’s share price. If Arm relists on the LSE (or even the Nasdaq), achieving a valuation of this magnitude will be almost impossible.
Edition: 125
- 10 December, 2021
Nvidia (NVDA)
Technology
Blueshift Research examine whether dramatic developmental changes in chip technology are putting increased pressure on NVDA to close its deal to buy Arm - smart everything means that the standard edge-to-the-data center model is going to break; a new kind of edge-based compute fabric centred around Arm’s tiny chip designs will rapidly emerge - an area that NVDA does not have a strong foothold. They also consider opposition to the deal to be short-sighted especially since Softbank cannot fund the innovation necessary for Arm to continue to evolve chip architecture.
Edition: 109
- 30 April, 2021