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