Nvidia Corp.’s finance chief says the efficiency companies need isn’t coming from spending less, but from spending more on technologies like artificial intelligence, even as chip sales dry up. says.
“AI is at an inflection point” Nvidia
Colette Kress said at Morgan Stanley’s Technology Media and Telecom Conference on Monday. “We are going through a specific point in generative AI right now. [OpenAI’s] Some of the simplest cases of ChatGPT as people understand it and how this will benefit them – either as a consumer use case, or from thinking about how companies can develop AI in space , benefit them. “
In that sense, Kress sees the recent surge in interest in ChatGPT straining the capacity of many public servers, and realizes that tightening belts isn’t necessarily the best way to save money. I made a pitch.
“When people think about these economic times, it’s a time when people focus on budgets, and it’s a time when people focus on spending,” Kress said. “But they are still working on how they spend their money, how they spend their capital more efficiently.”
“No matter how you look at it, the focus on accelerated computing will always be about improving efficiency and how they spend their money,” said Kress. “The amount of money you can save by moving to an accelerator is not only efficient from a computing perspective, but it will also reduce your spending.”
read: Nvidia adds to AI hype with new cloud-based service, stock price predictably jumps
But customers are already spending less. The Semiconductor Industry Association said Friday that global chip industry sales in January fell 18.5% year-on-year to $41.3 billion, down 5.2% from $43.6 billion in December 2022. bottom.
SIA President and CEO John Neuffer said: “Despite the current short-term cyclical recession, the long-term outlook for the semiconductor market remains bleak as chips play an increasingly greater role in powering critical technologies of the present and future. It’s a strong one.”
Bernstein analyst Stacey Rasgon, looking at the SIA data, said the month-over-month data was worse than typical seasonality, with memory chip sales coming from companies such as Micron Technology. pointed out.
— decreased by 58.6% year-on-year.
As for Nvidia, “the data center, software and automotive opportunities are still nascent and huge,” Rasgon said. Broadcom has semi-revenue visibility, software delivery support, cash deployment, superior margins, and [free cash flow]& attractive valuations;” Qualcomm said it was “struggling with a bear market and a channel flush … affecting its short-term trajectory, but the stock is still very cheap, things are normalizing, and Apple Inc.
Business is hanging out.
For AMD, “While PC weaknesses (and potentially damaging behavior from competitors) weigh heavily, the server story is working and margins could face headwinds.” And Intel’s “long-term structural problems finally came to the forefront,” Rasgon wrote. .
Rasgon has excellent ratings from Nvidia, Qualcomm, and Broadcom, high market performance ratings from AMD, and poor performance ratings from Intel.
read more: The world is buying fewer devices and stocking up more PCs, phones and tablets
Citi Research analyst Christopher Danely wrote in a note last week that “half” of the PC and wireless chip glut has been dealt with, as evidenced by chip makers like Intel claiming large amounts of inventory. is.
Advanced Micro Devices Co., Ltd.
Nvidia and Qualcomm Inc.
In a recent earnings report. Qualcomm predicts that Inventory problems continue until June.
According to Danely, the other “half” is the increasingly important data center market, maintained by public cloud providers like Amazon.com Inc.
Chips supplied by Texas Instruments supplied Google and the automotive and industrial markets that were in short supply during the pandemic.
NXP Semiconductors NV
— needs to be fixed.
PHLX Semiconductor Index
It tracks 30 components of the semiconductor industry, counting Nvidia and third-party fab provider Taiwan Semiconductor Manufacturing Co.
It hit a new all-time high on December 27, 2021 and closed at 4,039.51. a little over a year ago, The sector then fell back into bear market territory within a month from all-time highs. It’s still 26% away from the high.
But over the past 12 months, the SOX index has only fallen 8%.
The S&P 500 Index has fallen less than 1% over the past 12 months.
fell 6.5%, while the tech-heavy Nasdaq Composite
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