Nvidia CEO Jensen Huang’s compensation surged 60% to $34.2 million in the fiscal year, driven by the strong demand for the company’s AI chips.
Results for: AI Chips
TSMC’s recent announcements have raised questions about Intel’s claims of chip superiority. TSMC’s new A16 chip fabrication process and backside power supply technology surpass expectations, driven by demand from AI chip companies. Intel’s similar technology, 14A, may face competition as analysts debate its effectiveness. However, both TSMC and Intel’s technologies are still in development and must deliver on their promises.
Nvidia’s dominance in AI infrastructure is being challenged by smaller, AI-focused companies like Groq, Cerebras, and SambaNova. These companies are developing chips specifically designed for AI workloads, offering greater efficiency and performance. While Nvidia remains a leader with its full-stack ecosystem, investors should be cautious in the short-to-medium term as these competitors may disrupt the market and impact Nvidia’s valuation.
Intel’s upcoming AI chip, Gaudi 3, is expected to drive significant revenue growth for three major semiconductor companies: TSMC, Alchip, and Wistron. Morgan Stanley predicts that TSMC will produce the chips using its advanced 5-nanometer process, while Alchip will provide design services and Wistron will supply the baseboards. The financial institution forecasts shipments of 300-400k units by 2025, generating up to $3 billion for Intel. TSMC and Alchip are viewed as long-term winners in the AI semiconductor demand. The news has positive implications for Intel’s stock, which has been consolidating in recent months.
Despite a US ban on selling advanced AI chips to China, Reuters reports that 10 Chinese government-linked entities have acquired Nvidia chips through resellers. The chips were embedded in server products from Super Micro Computer, Dell Technologies, and Gigabyte Technology. The report raises concerns about the effectiveness of US export restrictions and the potential for China to develop its own AI capabilities.
Nvidia’s stock has skyrocketed since October 2022, but the stock price has recently experienced a 10% drop. The author believes that NVDA’s trajectory may mirror that of Tesla, which saw a sharp decline after its surge in 2021. This is due to the belief that markets are underestimating the incentive for the “Magnificent Seven” (Microsoft, Apple, Meta, Alphabet, Amazon, Tesla, Nvidia) to develop alternatives to NVDA products due to the increased competition. Consumers tend to become captive to certain brands or products, opting for shortcuts due to limited time and resources. However, corporations approach procurement differently. NVDA’s sales are primarily to corporations, and the mindset of corporate procurement personnel is vastly different from that of consumers. Corporations are less likely to become solely dependent on one supplier for critical components, leading to increased competition and risk for NVDA. The author believes that the “Magnificent Seven” will be working on developing their own AI chips to reduce reliance on NVDA and capture profit margins. The author has a bearish outlook on NVDA and suggests caution for investors, especially those who cannot afford to lose money.