Hello Trader,
By now, you're probably knee deep in turkey with a side of stuffing.
So, allow me to offer you some light reading as you settle into a food coma.
You've probably heard that Google's new AI chips could steal business from market leader Nvidia.
That's 100% true.
Competition can and should lead to better customer pricing, squeezing margins from the sellers.
Normally, that would cause Nvidia's market cap to fall more than Google's would rise.
But, that's only half the story.
Neither Google nor Nvidia produce their own semiconductors. They outsource production to foundies like Taiwan Semiconductor (TSM).
At the moment, TSM is maxed out on capacity.
So, in theory, we're looking at a zero-sum game as well, where any Google gains any sales Nvidia loses.
That would explain why the S&P 500 has held up remarkably well despite Nvidia's weakness.
I suspect we're looking at something in between.
Competition should force Nvidia to drop its pricing. However, there's such a backlog of demand I don't see that being disastrous.
However, we can't discount market sentiment.
Traders and investors keep short memories and follow trends. And since everyone and their mother owns Nvidia, a selloff in that name alone could trigger more selling.
As we head into December, it's worth keeping this story in mind. Because everyone expects the AI bubble to burst.
But unless supply increases dramatically, we're unlikely to see any serious impact to Nvidia's bottom line.
Jordan Schneir
Editorial Director, TheoTrade
Tidak ada komentar:
Posting Komentar