Global chip leaders are racing!
On February 13th, Japanese and Korean chip stocks performed strongly. SK Hynix opened with a sharp rise, driving the strength of the South Korean chip sector, closing up nearly 5%. SoftBank Group's stock price rose strongly at the beginning of the trading session, with a surge of over 10%, and as of the close, it had risen by over 6%.
On February 12th, NVIDIA's market value briefly surpassed that of Amazon and Google's parent company Alphabet, becoming the fourth highest company in the world by market value. As of the close, Nvidia's stock price closed at $722.48 per share, with a market value of $1.78 trillion (approximately RMB 12.8 trillion). Since the AI wave swept through in October 2022, Nvidia's stock price has risen nearly fivefold.
On the same day, ARM, a chip design company held by SoftBank, saw its stock price surge by 42%. As of closing, it rose 29.3% to close at $148.97 per share, with a market value of $153.2 billion (approximately RMB 1.1 trillion). Since the release of its impressive financial report, the stock price has been extremely active recently, and in the past three trading days, the stock price has doubled.
Thanks to the sharp rise in overseas chip stocks, related QDII funds have performed well since the beginning of the year. Looking ahead to the future market of A-share chip stocks, some institutions believe that the surge in overseas chips confirms that the upward trend of the global semiconductor business cycle has begun. The growth of the semiconductor localization sector will maintain a relatively high growth rate in the medium to long term.
Nvidia's market value once surpassed that of Google and Amazon
On Monday (February 12th) Eastern Time, Nvidia surpassed Amazon and Google's parent company Alphabet in market value, becoming the fourth highest company in the world by market value, only behind Microsoft, Apple, and Saudi Aramco. As of the close, Nvidia's stock price rose 0.16% to close at $722.48 per share, with a market value of $1.78 trillion (approximately RMB 12.8 trillion), slightly lower than Amazon and Alphabet.
It is worth mentioning that as a global leader in artificial intelligence (AI) chips, Nvidia's stock price continues to break new historical highs. Since the AI wave swept through in October 2022, Nvidia's stock price has risen nearly fivefold, with a 239% increase in 2023.
Wall Street predicts that Nvidia's fourth quarter revenue will reach $20.27 billion, non GAAP earnings per share will reach $4.53, and both revenue and net profit will achieve continuous growth.
International renowned institutions such as Goldman Sachs, Bank of America, and Morgan Stanley have recently raised Nvidia's target price. Goldman Sachs stated that investment in AI infrastructure, including from governments and technology giants around the world, will further drive Nvidia's revenue. Therefore, Goldman Sachs has raised Nvidia's annual profit forecast by an average of 22% from 2025 to 2026.
ARM stock price doubles in three days
ARM, a chip design company held by SoftBank, also performed well in terms of stock price. On February 12th, the stock surged 42% and as of the close, it rose 29.3% to close at $148.97 per share, with a market value of $153.2 billion (approximately RMB 1.1 trillion). The stock has been extremely active recently, with the stock price doubling in the past three trading days.
The surge in stock prices is due to ARM's recent impressive financial report. ARM's announcement for the third quarter of fiscal year 2024 (July September 2023) shows a revenue of $824 million, a year-on-year increase of 14%, and a net profit of $87 million.
It is reported that ARM itself does not directly design, manufacture or sell chip products, but mainly licenses its designed chip architecture (IP) and related technologies to chip manufacturers, making money through licensing transactions and patent fees. In the quarter, its patent fees increased by 11% year-on-year, reaching $470 million, partly due to the recovery of the smartphone market and sales growth from automotive and cloud computing data centers.
In addition, ARM has released better than expected Q4 2023 performance guidance, with expected revenue of $850 million to $900 million, compared to an expected $778 million. ARM claims that performance growth is driven by franchise and licensing revenue. Because the client aims to design new chips for artificial intelligence work, resulting in higher licensing fees.
ARM executives have stated that their expansion strategy has begun to pay off, with customers flocking to ARM based central processors to supplement Nvidia's chips for data center artificial intelligence work, and are committed to developing new laptops and smartphones that can handle chatbots and other artificial intelligence functions.
The upward trend of the global semiconductor business cycle has begun
Some analysts believe that since 2023, the most impressive performance in the NASDAQ index in the United States has been related to artificial intelligence computing power, demonstrating the disruptive changes brought by the AI big model to this industry.
It is worth mentioning that the market value weighted ETF (QDII) of Jingshun Great Wall NASDAQ Technology, which holds a heavy stake in US technology stocks, has risen by over 11% this year, leading the rise of QDII. As of the end of 2023, the top ten heavily held stocks of the fund are Apple, Microsoft, NVIDIA, META PLATFORMS, ALPHABET-A, ALPHABET-C, BROADCOM, and ADOBE AMD and Intel.
What are the references for A-share investment?
The technology team of Noan Fund stated that the long-term focus on the technology sector, including semiconductor equipment in the field of technology security and technological changes in the field of artificial intelligence, continues to follow the previous investment logic and continue to advance in the industry. Based on the expectation of stable and upward economic growth in 2024, Noan Fund tends to believe that investors' pessimistic expectations are expected to reverse simultaneously. The surge in overseas chips has confirmed that the upward trend of the global semiconductor business cycle has begun. Looking ahead to the future, we firmly believe that Chinese technology will definitely comprehensively break through the blockade imposed by the United States. During this process, the growth of the semiconductor localization sector will maintain a relatively high growth rate in the medium to long term. The global trend in the artificial intelligence industry is strong, coupled with the multiple benefits of the recovery in demand for smartphones. 2024 will be a year of flourishing technology.
Di Xinghua, fund manager of Guofu Global Technology Interconnection Hybrid (QDII), said that AI has just begun. "We can see that some companies in the US stock market that are related to AI do have new AI business coming in on the revenue side of their reports. However, what we have overlooked is that many companies have contracted their costs due to AI, and the entire profit curve has opened up, which is very exciting. Therefore, we will deeply consider the impact of AI on the revenue and cost sides of holding companies." Di Xinghua believes that in the long run, The potential productivity improvement and increase in labor supply brought about by artificial intelligence cannot be underestimated.
Looking ahead to the future, Yang Weiwei, fund manager of Great Wall Fund, believes that AI and domestic substitution are the two driving forces for the semiconductor industry. In terms of AI, it includes both the localization of AI computing power chips and AI related hardware and chips. For example, this year, some giants have officially started to lay out AR glasses, which are excellent landing carriers for AI, and related A-share chip companies will be the focus of attention.
Zhao Zongting, the ETF fund manager of Huaxia Chip, stated that the investment logic for the semiconductor chip sector mainly consists of three points: first, at the bottom of the cycle, the economy is recovering; Secondly, artificial intelligence drives the super innovation cycle, and AI chips usher in development opportunities; Thirdly, domestic alternative research and development achievements are gradually being implemented, and breakthrough products are being released.