Tech Stocks

Time to Sell NVIDIA Stocks as Company’s Growth Falters

NVIDIA Corporation (NVDA) faced a significant setback on April 24th as its stock plummeted over 3%, breaching the crucial $800 mark once again. This decline comes amidst concerns over the company’s growth trajectory and its ability to meet market expectations.

Despite its reputation as a leader in AI computing and graphics processing, NVIDIA’s performance in the second quarter has raised doubts among investors. With lackluster growth and an inability to sustain its high stock price, some analysts are suggesting that it may be time for investors to consider selling their NVIDIA shares.

The disappointing stock performance reflects broader concerns about NVIDIA’s business outlook. While the company continues to invest in cutting-edge technologies and pursue strategic acquisitions, such as the recent acquisition of Israeli AI startup Deci, its efforts have yet to translate into meaningful growth.

Moreover, NVIDIA’s stock price appears to be overvalued, further exacerbating concerns among investors. The company’s lofty valuation may not be justified by its current financial performance, leading many to question whether it is worth holding onto NVIDIA stocks at this time.

In light of these developments, investors are advised to carefully reassess their positions in NVIDIA. While the company remains a formidable player in the tech industry, its recent struggles and uncertain outlook suggest that there may be better investment opportunities elsewhere.

In conclusion, NVIDIA’s underwhelming performance and overvalued stock price signal that it may be time to sell NVIDIA stocks. Investors should weigh the risks and rewards carefully and consider reallocating their investments to more promising opportunities in the market.

Stocks Market

US Stock Market Faces Massive Outflows Amid Economic Strength and Persistent Inflation Concerns

A team led by Michael Hartnett, a strategist at Bank of America, pointed out in their latest report that the robust performance of the US economy and stubborn inflation have reignited concerns in the market about “higher and longer” interest rates, leading investors to withdraw funds from the stock market.

Bank of America cited data from EPFR Global, indicating that investors withdrew $21.1 billion from equity funds over the past two weeks as of Wednesday. This marks the largest outflow from the US stock market since December 2022. On Friday alone, several US tech companies experienced a “sell-off,” with their stock prices plummeting. By the day’s close, Advanced Micro Devices (AMD) plummeted by 23%, dragging down stocks including NVIDIA (NVDA), which fell by 10%, resulting in a market value loss of over $200 billion overnight. Additionally, streaming giant Netflix (NFLX) plunged over 9%, shedding $23.9 billion in market value in a single day.

The report points out that with the resurgence of inflation, the better the US economy performs, the further the Federal Reserve’s rate-cutting cycle is pushed back. Hence, the adage “good news for the US economy becomes bad news for the stock market” is now starkly contrasting with investors’ sentiments during the first quarter when they were anticipating a “Goldilocks rally.”

In the first quarter, investors viewed positive economic data as a boon for corporate earnings. Although this lowered expectations for Fed rate cuts, some degree of monetary easing policies was still considered almost certain. However, as economic data continues to display resilience, rate cuts are being further postponed, with some policymakers even suggesting that further rate hikes are not out of the question.

After a strong performance in the first quarter, US stocks experienced a downturn in April. Facing inflation and a hot job market, rate-cut expectations have dwindled from nearly 7 cuts at the beginning of the year to less than 2 cuts, with escalated Middle East conflicts also affecting risk appetite. Some analysts point out that the market is concerned that geopolitical tensions could lead to rising energy prices and continued inflation, further delaying the Fed’s dovish stance. Michael Hartnett, the strategist at Bank of America, stated that as the market interprets sustained strong US data as negative, risk assets are undergoing an adjustment in the second quarter.

Hartnett noted that bulls consider this pullback “healthy,” while bears are growing increasingly wary of US growth stocks as they strive to break new highs. Meanwhile, high-yield bonds are also showing ominous signs. US stocks may transition into a “bad news is bad news” state.

Tech Stocks

Citigroup Initiates 90-Day Positive Observation Period for Nvidia

On April 15th, Citigroup(C) announced the initiation of a 90-day positive observation period for Nvidia(NVDA), signaling potential adjustments in the stock price following a sustained period of growth.

Nvidia, a leading player in the graphics processing unit (GPU) market, has experienced significant momentum in recent months, driven by increasing demand for its products in various sectors, particularly artificial intelligence (AI) and chip industries.

The AI industry, in particular, has been witnessing rapid growth, with increasing applications across sectors such as healthcare, finance, automotive, and more. Nvidia’s GPUs are widely used in AI applications due to their parallel processing capabilities and efficiency in handling complex computations, making them essential components in AI infrastructure.

Furthermore, the semiconductor industry, which Nvidia is a part of, has been experiencing heightened demand for chips driven by various factors, including the global shift towards digitalization, the proliferation of smart devices, and the rise of new technologies such as 5G, Internet of Things (IoT), and autonomous vehicles.

Nvidia has strategically positioned itself to capitalize on these trends, expanding its product offerings beyond GPUs to include data center solutions, gaming consoles, and automotive computing platforms. The company’s focus on innovation and partnerships with industry leaders has enabled it to maintain a competitive edge in the market.

However, Citigroup’s decision to initiate a positive observation period suggests a cautious approach to Nvidia’s recent stock performance. While Nvidia has seen significant growth, investors and analysts may be assessing whether the current valuation is justified by the company’s fundamentals and future growth prospects.

The outcome of Citigroup’s observation period will likely influence investor sentiment towards Nvidia(NVDA) and could impact the company’s stock price in the short term. Investors will closely monitor Nvidia’s financial performance, product developments, and market trends during this period to gauge its long-term potential.

In conclusion, Nvidia’s position in the AI and semiconductor industries presents both opportunities and challenges amidst changing market dynamics. The initiation of a positive observation period by Citigroup(C) reflects the need for careful evaluation of Nvidia’s performance and market conditions, highlighting the importance of thorough analysis in investment decisions.

Tech Stocks

Nvidia Tightens Ecosystem Barriers, Chinese GPU Manufacturers Accelerate Autonomous Ecosystem Development

Recent announcements by Nvidia (NVDA) regarding the prohibition of running CUDA software through translation layers on other GPUs have sparked widespread discussions within China’s industry.

The core competitiveness of GPUs lies in factors such as architecture, which determine performance superiority and computational ecosystem barriers. It’s well-known that Nvidia, with its first-mover advantage and the CUDA architecture, which significantly lowers the development threshold, has firmly captured a large number of users. This not only makes GPUs gradually take center stage in general computing but also builds a moat for Nvidia itself.

“At the toolchain level, GPU manufacturers compatible with CUDA will be affected, but the impact itself is quite complex technically. Nvidia is sending a strong signal that it’s tightening the fence around its own ecosystem,” a GPU industry insider in China told reporters.

China CITIC Securities stated that due to CUDA’s closed-source nature and rapid updates, it’s difficult for latecomers to achieve perfect compatibility through instruction translation. Even partial compatibility may result in significant performance losses, leading to continuous lag behind Nvidia in terms of cost-effectiveness. Moreover, CUDA is Nvidia’s proprietary software stack, containing many proprietary features of Nvidia GPU hardware, which are not reflected in chips from other manufacturers.

This is the dilemma facing Chinese manufacturers. Currently, Chinese GPU manufacturers are vigorously investing in research and iterative architecture development, seeking to build their own autonomous software and hardware ecosystems. While compatibility with existing ecosystems is easier for the initial development of Chinese GPUs, in the long term, they need to move away from compatibility and develop their own core technologies.

“We often talk about compatibility, but compatibility doesn’t mean doing exactly the same thing as Nvidia; it means your product can support the ecosystem of all technologies, absorb Nvidia’s ecosystem, and directly utilize it. However, achieving comprehensive functionality comparable to Nvidia’s GPU chips is very difficult. At present, most manufacturers’ strategy is to only implement some functions of Nvidia’s GPU artificial intelligence acceleration,” said Zhang Yubo, CTO of Moore Threads in China. “But Moore Threads can achieve the four major functions in Nvidia’s system architecture, including general computing, AI acceleration, graphics rendering, and video encoding and decoding.”

Moore Threads, established in 2020, is an integrated circuit enterprise mainly focused on full-featured GPU chip design. It’s reported that Moore Threads has launched the MUSA architecture, which is fully comparable to CUDA. Users can recompile applications written in CUDA into MUSA applications through Moore Threads’ compiler, achieving near-zero-cost migration while also being able to develop new applications using standard programming languages. “So, MUSA itself is an independent ecosystem, while also being an open one that can absorb the existing ecosystem,” Zhang Yubo said.

“Independence and openness are not contradictory. On the one hand, we can independently develop and control, and on the other hand, we can open up and be compatible with Nvidia’s advantages,” Zhang Yubo told reporters. “Only when the hardware functions are fully comparable can we effectively absorb the applications of the CUDA ecosystem. If there is no way to absorb the existing ecosystem and build a new one, it will take ten to twenty years to truly establish it.”

In fact, customer migration costs are one of the important factors driving Chinese GPU manufacturers to accelerate ecosystem construction. Currently, China also has some companies adhering to the “difficult but correct” concept, choosing to build their own ecosystems and not to be compatible. One of them is Sugon in China.

Sugon focuses on cloud and edge computing products in the field of artificial intelligence, dedicated to building a computing base for general artificial intelligence, providing original and independent AI acceleration cards, system clusters, and hardware and software solutions.

For companies like Sugon, customer migration costs always exist, so they need to find like-minded customers. “Sugon hopes to build an open-source ecosystem with industry partners, and our customers are willing to work with partners who have a long-term vision to refine products,” said Li Xingyu, Chief Ecological Officer of Sugon.

With the advancement of technology, the road of independent ecosystem construction by Chinese manufacturers is expected to become wider.

“The paradigm shift in technology ecosystems brings a new opportunity for startups like Sugon,” Li Xingyu believes. With the advent of the era of large models, the architecture base of models tends to be consistent, namely Transformer, which converges the demand for hardware, making the direction of hardware design more focused and clear, reducing fragmentation. At the same time, the increasingly popular open-source frameworks and programming languages allow chip companies to have a better foundation to adapt to different models, making it easier for developers to adapt to different hardware at the development tool level.

“The customer’s migration cost depends on many factors, but the overall trend is becoming more convenient,” Li Xingyu said. “For example, we are compatible with mainstream operators of PyTorch, and models using these mainstream operators theoretically can be directly migrated without changing the source code. At the same time, we will also support more mainstream open-source programming languages in the future, making it easier for customers to develop new models.”

Currently, there are many AI chip manufacturers in China choosing to build their own ecosystems, but they have not formed a unified ecosystem, and each is in a period of rapid development. Indeed, in the early stages of technological development and rapid iteration, it’s difficult to formulate a unified standard. Just as in the early stages of the development of GPUs in other countries, there were more than forty companies in the industry, but after the storm, only a few remained and grew stronger. In the face of rapidly changing technological trends, everyone has their own understanding, and letting the market and customers choose may be a better way.

“The improvement of technology ultimately depends on the traction of the market and customer demand. China’s real advantage lies in having the world’s largest market and many developers willing to embrace new technologies,” Li Xingyu said.

Nvidia’s recent prohibition on running CUDA software through translation layers on other GPUs may sound the alarm for some manufacturers who rely solely on compatibility paths. According to GPU industry insiders, Nvidia’s “symbolic restriction measures” are still relatively restrained and have not imposed restrictions on application programming interfaces. However, for an entrepreneur, what needs to be considered is not just the current situation, but also what the second and third steps of restrictions are.

Tech Stocks

xAI Seeks $3-4 Billion Funding: Valuation at $18 Billion

Elon Musk’s artificial intelligence startup, xAI, is currently seeking a financing round of $3 billion to $4 billion, with the potential to raise its valuation to $18 billion, according to materials provided to investors. However, the terms and amount of this funding round remain uncertain and subject to change, as per sources familiar with the matter. Reports surfaced last weekend indicating the company’s pursuit of a $3 billion funding round.

In light of this news, let’s delve deeper into the landscape of artificial intelligence and chip-related companies, comparing a few standout players to analyze their future business strategies, performance trends, and stock price movements.

Firstly, let’s consider NVIDIA Corporation (NVDA) and Advanced Micro Devices, Inc. (AMD), two leading chipmakers heavily involved in AI development. NVIDIA has been at the forefront of AI innovation, with its GPUs powering many AI applications, while AMD has also made significant strides in this field with its CPUs and GPUs. Both companies have experienced strong growth in recent years, driven by increasing demand for AI-related technologies across various industries. Their future prospects largely depend on their ability to maintain technological leadership and capitalize on emerging opportunities in AI-driven industries.

Another notable player in the AI space is Alphabet Inc. (GOOG), particularly through its subsidiary Google. Google’s AI initiatives span a wide range of products and services, from its search engine algorithms to its self-driving car project, Waymo. With vast resources and expertise in machine learning and data analysis, Google remains a key player in shaping the future of AI technology. However, it faces growing regulatory scrutiny and competition concerns, which could impact its growth trajectory.

In comparison, xAI, backed by Elon Musk’s visionary leadership, aims to disrupt the AI landscape with innovative solutions and breakthrough technologies. Despite being a relatively new entrant, xAI’s ambitious funding goals reflect its confidence in its ability to drive innovation and capture market share in the highly competitive AI industry. However, its success will depend on its ability to attract top talent, develop cutting-edge technologies, and establish strategic partnerships to scale its operations effectively.

As the AI industry continues to evolve rapidly, investors will closely monitor the performance and growth prospects of these companies. While established players like NVIDIA(NVDA), AMD(AMD), and Google(GOOG) have already made significant strides in AI, emerging startups like xAI pose exciting opportunities for investors seeking exposure to the burgeoning AI market. The outcome of xAI’s funding round and its subsequent growth trajectory will undoubtedly be closely watched by industry observers and investors alike.

Tech Stocks

Chip Giant Intel Releases Latest AI Chip, Performance Far Surpasses Nvidia H100

Intel(INTC), the chip giant, has unveiled its latest artificial intelligence (AI) chip, Gaudi 3, on April 9th, with expectations of widespread availability in the third quarter.

During the Intel Vision 2024 conference held on the same day, Intel claimed that the new Gaudi 3 chip offers an average 50% improvement in inference capabilities and a 40% improvement in efficiency compared to Nvidia(NVDA)’s H100 chip. Additionally, the speed of running AI models with Gaudi 3 is 1.5 times that of H100. Intel stated that this product will be roughly equivalent to Nvidia’s latest H200 chip, and in some areas, it may even outperform it.

Intel tested the chip on models such as Llama, which is open source, and Falcon, supported by Abu Dhabi. The company stated that the new Gaudi 3 can assist in training or deploying models, including stable diffusion or OpenAI’s Whisper model for speech recognition. Intel claimed that its chips have lower power consumption compared to Nvidia’s.

The new Gaudi 3 chip from Intel is set to be widely available to customers in the third quarter, with companies including Dell, HP, and Supermicro planning to utilize the chip. However, Intel did not provide a price range for Gaudi 3.

Das Kamhout, Vice President of Intel’s Xeon Software, stated, “We do expect it to be highly competitive with Nvidia’s latest chips, from our competitive pricing to our unique open integrated chip network where we use industry-standard Ethernet.” “We believe this is a strong product.”

Sachin Katti, Senior Vice President of Intel’s Network Group, mentioned during a conference call, “We are working with the software ecosystem to build open reference software and building blocks that allow you to stitch together the solution you need rather than being forced to buy a solution.”

According to Intel, the Gaudi 3 chip is manufactured using 5-nanometer process technology, indicating that the company is utilizing external foundries for chip production. In addition to designing Gaudi 3, Intel also plans to produce AI chips at a new factory in Ohio, expected to commence operations in 2027 or 2028.

However, challenging Nvidia is no easy task. According to statistics, Nvidia currently holds an 80% share of the AI chip market, making it a dominant player. Over the past year, the company’s GPUs have been the preferred high-end chips for AI manufacturers.

In addition to the Gaudi 3 accelerator, Intel(INTC) has also released another hardware: the sixth-generation Xeon processor. It provides high-performance solutions for running current generation AI solutions, including RAG. It is set to be launched in the second quarter of this year.

Compared to the second-generation Intel Xeon processors, the sixth-generation Xeon processor, codenamed Sierra Forest, offers a four-fold increase in performance per watt and a 2.7-fold increase in rack density.

The sixth-generation Xeon processor, codenamed Granite Rapids, incorporates software support for the MXFP4 data format. Compared to the fourth-generation Xeon processor using FP16, its next token latency can be reduced by up to 6.5 times, and it can run the Llama-2 model with 70 billion parameters.

As of the close of April 9th, Intel’s stock was at $38.33, up 0.92%, with a market capitalization of $163.17 billion. In response to this news, Nvidia continued to decline by over 2%. Perhaps it’s time to sell Nvidia(NVDA) stocks.

Tech Stocks

TSMC Will Construct Its Third Semiconductor Fab In Arizona, Receiving $6.6 billion Subsidy

The recent announcement by the U.S. Department of Commerce regarding TSMC’s agreement to construct its third semiconductor fab in Arizona as part of a $65 billion investment plan has sent shockwaves through the semiconductor industry. This move, aimed at bolstering U.S. chip manufacturing capabilities, is expected to have significant implications for various companies within the sector.

TSMC’s decision to establish a cutting-edge facility in Arizona underscores the increasing importance of domestic semiconductor production amid global supply chain disruptions and geopolitical tensions. With a commitment to begin producing 2-nanometer chips in the U.S. by 2028, TSMC is poised to strengthen its foothold in the American market and address growing demands for advanced semiconductor technology.

As TSMC solidifies its presence in the U.S., several key players in the semiconductor industry are likely to feel the impact of this strategic expansion. Here are some companies that could be affected:

  1. Intel Corporation (INTC): As one of the leading American semiconductor companies, Intel may face heightened competition from TSMC’s enhanced presence in the U.S. market. The move could intensify pressure on Intel to innovate and maintain its technological edge.
  2. Applied Materials, Inc. (AMAT): A major supplier of semiconductor manufacturing equipment, Applied Materials stands to benefit from increased investment in semiconductor fabrication facilities. The expansion of TSMC’s operations in Arizona could lead to greater demand for equipment and technology from suppliers like Applied Materials.
  3. NVIDIA Corporation (NVDA): As a major customer of TSMC, NVIDIA could benefit from improved access to advanced semiconductor manufacturing capabilities in the U.S. The expansion could support NVIDIA’s efforts to develop and produce high-performance chips for its graphics cards and data center products.
  4. Advanced Micro Devices, Inc. (AMD): Another significant client of TSMC, AMD may experience positive effects from the increased availability of domestically manufactured chips. The expansion could enhance AMD’s competitiveness in the market and support its growth trajectory.
  5. Qualcomm Incorporated (QCOM): Given its reliance on TSMC for chip production, Qualcomm could benefit from the expanded capacity and capabilities of TSMC’s Arizona fab. The move may strengthen Qualcomm’s position in the U.S. semiconductor market and facilitate its efforts to develop advanced mobile and wireless technologies.

In summary, TSMC’s decision to build a third semiconductor fab in Arizona as part of its multi-billion-dollar investment plan is expected to have far-reaching implications for various companies within the semiconductor industry. While it signals a significant step towards bolstering domestic chip manufacturing capabilities, it also underscores the evolving dynamics of global semiconductor supply chains and competition in the tech industry. As stakeholders assess the potential ramifications of this development, attention will undoubtedly be focused on how it reshapes the competitive landscape and influences future trends in the semiconductor market.

Bank Stocks Financial stocks

The US Stock Earnings Season Kicks off This Week

The first-quarter earnings season is set to gradually commence in the US stock market this week, with JPMorgan Chase(JPM), Wells Fargo(WFC), and Citigroup(C) leading the way on Friday. Following suit will be global asset management giant BlackRock(BLK), and Delta Air Lines(DAL).

Despite the impressive performance of US stocks in the first quarter, Wall Street anticipates a relatively lackluster earnings season for American companies. However, analysts expect the “Big Seven” to continue driving profit growth in the US stock market, particularly in the telecommunications and technology sectors. Moreover, with US companies currently boasting record-high levels of cash flow, many firms may announce substantial buybacks and business expansions.

While the S&P 500 index surged by 10.16% in the first three months of the year, Wall Street strategists hold a somewhat pessimistic view regarding the performance of US companies in the first quarter. Expected profit growth for S&P 500 index component companies is forecasted to be the lowest since 2019, standing at just 3.9% year-on-year.

However, this situation could potentially be interpreted as a positive sign. If US companies outperform expectations, it could boost market confidence and fuel further growth. A similar scenario occurred three months ago when companies surpassed fourth-quarter earnings expectations, leading to market gains.

Wendy Soong, a senior analyst at Business Insider, noted, “Traders expect the Federal Reserve to cut interest rates later this year, which could result in stronger consumer spending, economic activity, better profit growth, and higher stock prices.”

Wall Street has outlined five major investment themes to watch during this earnings season:

  1. Continued profit growth led by the “Big Seven” companies, with significant increases anticipated for firms like Apple(AAPL), Microsoft(MSFT), Alphabet(GOOG), Amazon(AMZN), Nvidia(NVDA), Meta(META), and Tesla(TSLA) in the first quarter.
  2. Expected profit growth in the communication services, technology, and utilities sectors, while some sectors like energy, materials, and healthcare may experience profit declines.
  3. Record-high levels of corporate cash flow and free cash flow, potentially leading to increased capital allocation through dividend payments and investments.
  4. Improved operating profit margins, indicating enhanced corporate profitability.
  5. Potential disparity between stock price trends and earnings performance, as indicated by a low correlation index for S&P 500 index component stocks.

In summary, while Wall Street holds a somewhat negative outlook for the upcoming earnings season, potential positive surprises in corporate performance could spur market growth and bolster investor confidence.