The Chip Giants Poll
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Mixed earnings and outlooks from chip giants AMD, Nvidia, and Intel leave investors in a cloud of confusion. IGTV’s Angeline Ong takes a look at the issues surrounding the sector to cut through the haze.
AMD, Nvidia, Intel … there’s so much noise in the chip space, it’s hard to hear yourself think. Let’s get you across the details first. Advanced Micro Devices Inc (All Sessions) shares slumped after the chip giant’s quarterly sales missed, due to a weak PC market. That is totally opposite to rival Intel Corp (All Sessions), which said the PC market would start rebounding in the second half, raising Intel's margins with it. Meanwhile, Nvidia, which analysts say has the bulk of the AI market, reports at the end of May. Ahead of that, NVIDIA and Australia’s Appen Limited said they were teaming up for AI solutions – the two already work together on developing speech AI and language models. Appen’s shares jumped on the news.
How do you cut out the noise?
To understand the sector, you also need to understand the politics, the US is worried that China will one day no longer need its chips so that’s why its redoubling its own chip development efforts. China is, of course, a huge market for the US. Nvidia already sells to China’s top tech firms including Tencent Holdings Ltd, Alibaba Group Holding Ltd (All Sessions) and Baidu Inc - ADR (All Sessions)
However, having China as the global chip manufacturing hub also has potential downsides and risks. So, if you’re looking at investing in chips, it is important that you distinguish the players from the sector and understand the politics surrounding this industry. It’s been painful for those who shorted NVIDIA Corp (All Sessions). Short sellers have lost 5 billion dollars this year as Nvidia’s shares rose more than 90% so far in 2023, and we’re not even midway through.