Why this investor doesn't own NVIDIA (and what she owns instead)

LiveWire04-29

Artificial intelligence captured much of the focus for investors in the back end of 2023 and into the first quarter of 2024. The “mega-cap” technology firms, which comprise around 30% of the S&P 500 ...

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The “mega-cap” technology firms, which comprise around 30% of the S&P 500 ...</p>\n\n<a href=\"https://www.livewiremarkets.com/wires/why-this-investor-doesn-t-own-nvidia-and-what-she-owns-instead\">Source Link</a>\n\n</div>\n","source":"livewire_stock","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Why this investor doesn't own NVIDIA (and what she owns instead)</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nWhy this investor doesn't own NVIDIA (and what she owns instead)\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-04-29 12:00 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.livewiremarkets.com/wires/why-this-investor-doesn-t-own-nvidia-and-what-she-owns-instead><strong>LiveWire</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Artificial intelligence captured much of the focus for investors in the back end of 2023 and into the first quarter of 2024. The “mega-cap” technology firms, which comprise around 30% of the S&P 500 ...</p>\n\n<a href=\"https://www.livewiremarkets.com/wires/why-this-investor-doesn-t-own-nvidia-and-what-she-owns-instead\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"META","symbol_name":"Meta Platforms","start_time":0,"source_url":"https://www.livewiremarkets.com/wires/why-this-investor-doesn-t-own-nvidia-and-what-she-owns-instead","article_id":"2431027849","we_media_id":null,"thumbnails":[],"rights":{"source":"livewire_stock","url":"https://www.livewiremarkets.com/wires/why-this-investor-doesn-t-own-nvidia-and-what-she-owns-instead","rn_cache_url":null,"directOrigin":true},"url":"https://stock-news.laohu8.com/highlight/detail?id=2431027849","pubTimestamp":1714363202,"sourceInfo":{"source_id":"livewire_stock","name":"Livewire Markets"},"weMediaInfo":null,"summary":"Artificial intelligence captured much of the focus for investors in the back end of 2023 and into the first quarter of 2024. The “mega-cap” technology firms, which comprise around 30% of the S&P 500 index, accounted for a large proportion of the market gains between late October and the end of March. Collectively, they contributed 37% of the index’s gains in the first quarter of 2024.They also contributed around 10% of the total 26% return delivered by the MSCI Global Growth ex-Australia index between the end of 2022 and March 2024, says Franklin Global Growth portfolio manager Francyne Mu.But there are other ways to invest in the theme, as we find out in the following interview. Mu provides her view on the AI theme and explains why Alphabet ,Meta and NVIDIA aren’t in her portfolio. Mu also discusses how her team finds opportunities and a few other technology names she believes have similar growth drivers but fewer risks.She also emphasises corporate governance, in the way manage","collect":0,"end_time":0,"defaultTopTitle":"livewiremarkets.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"META":"Meta Platforms","LU1720051017.SGD":"Allianz Global Artificial Intelligence AT Acc H2-SGD","IE0002270589.USD":"LEGG MASON CLEARBRIDGE VALUE \"A\" (USD) INC","LU0648001328.SGD":"Natixis Harris Associates US Equity RA SGD","GOOG":"谷歌","IE0034235188.USD":"PINEBRIDGE GLOBAL FOCUS EQUITY \"A\" (USD) ACC","GOOGL":"谷歌A","LU0354030511.USD":"ALLSPRING  U.S. LARGE CAP GROWTH \"I\" (USD) ACC","ANSS":"安斯科技","PSQ":"纳指反向ETF","LU0354030438.USD":"富国美国大盘成长基金Cl A Acc","QID":"纳指两倍做空ETF","BK4549":"软银资本持仓","IE0009356076.USD":"JANUS HENDERSON GLOBAL TECHNOLOGY AND INNOVATION \"A2\" (USD) ACC","BK4548":"巴美列捷福持仓","LU1815336760.USD":"THREADNEEDLE (LUX) GLOBAL TECHNOLOGY \"AUP\" (USD) INC","LU0528227936.USD":"富达环球人口趋势基金A-ACC","FRGG.AU":"FRKLN GG TMF UNITS","SNPS":"新思科技","IE0004445239.USD":"JANUS HENDERSON US FORTY \"A2\" (USD) ACC","LU2357305700.SGD":"Allianz Global Artificial Intelligence ET H2-SGD","QLD":"纳指两倍做多ETF","BK4554":"元宇宙及AR概念","TQQQ":"纳指三倍做多ETF","IE00BJTD4V19.USD":"NEUBERGER BERMAN US LONG SHORT EQUITY \"A1\" (USD) ACC",".IXIC":"NASDAQ Composite","MSFT":"微软","BK4553":"喜马拉雅资本持仓","LU0312595415.SGD":"Schroder ISF Global Climate Change Equity A Acc SGD","GB00BDT5M118.USD":"天利环球扩展Alpha基金A Acc","GB00B4QBRK32.GBP":"FUNDSMITH EQUITY \"R\" (GBP) INC","AMZN":"亚马逊","MDB":"MongoDB Inc.","IE00B19Z3B42.SGD":"Legg Mason ClearBridge - Value A Acc SGD","SQQQ":"纳指三倍做空ETF","GB00B4LPDJ14.GBP":"FUNDSMITH EQUITY \"R\" (GBP) ACC","LU0353189680.USD":"富国美国全盘成长基金Cl A Acc","LU2272731782.SGD":"Allianz Global Intelligent Cities AM Dis H2-SGD","IE00BBT3K403.USD":"LEGG MASON CLEARBRIDGE TACTICAL DIVIDEND INCOME \"A(USD) ACC","IE00BKDWB100.SGD":"PINEBRIDGE US LARGE CAP RESEARCH ENHANCED \"A5H\" (SGDHDG) ACC","LU0494093205.USD":"贝莱德ESG灵活多元资产A2 USD-H","LU1914381329.SGD":"Allianz Best Styles Global Equity Cl ET Acc H2-SGD","LU0310799852.SGD":"FTIF - Templeton Global Equity Income A MDIS SGD","LU2272731600.USD":"Allianz Global Intelligent Cities AM Dis USD","LU1804176565.USD":"EASTSPRING INV GLOBAL GROWTH EQUITY \"A\" (USD) ACC","QQQ":"纳指100ETF","BK4559":"巴菲特持仓","NVDA":"英伟达"},"translate_title":"为什么这位投资者不拥有英伟达（以及她拥有什么）","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"AMZN":1,"ANSS":1,"MDB":1,"GOOGL":1,"SNPS":1,"META":1,"NVDA":1,"FRGG.AU":1,"GOOG":0.9,".IXIC":0.9,"MSFT":0.8,"QID":0.6,"SQQQ":0.6,"TQQQ":0.6,"QQQ":0.6,"QLD":0.6,"PSQ":0.6,"MNQmain":0.6,"NQmain":0.6},"content_text":"Artificial intelligence captured much of the focus for investors in the back end of 2023 and into the first quarter of 2024. The “mega-cap” technology firms, which comprise around 30% of the S&P 500 index, accounted for a large proportion of the market gains between late October and the end of March. Collectively, they contributed 37% of the index’s gains in the first quarter of 2024.\nThey also contributed around 10% of the total 26% return delivered by the MSCI Global Growth ex-Australia index between the end of 2022 and March 2024, says Franklin Global Growth portfolio manager Francyne Mu.\nBut there are other ways to invest in the theme, as we find out in the following interview. Mu provides her view on the AI theme and explains why Alphabet (NASDAQ: GOOGL), Meta (NASDAQ: META) and NVIDIA (NASDAQ: NVDA) aren’t in her portfolio. Mu also discusses how her team finds opportunities and a few other technology names she believes have similar growth drivers but fewer risks. \nWhere are we now in the AI theme?\nMu believes that across the full Generative AI technology stack, we’re in the early stages of the infrastructure phase.\nMu discusses a “crowding” within this stage, which was kicked off when OpenAI launched ChatGPT in November 2022 (which Microsoft later joined in partnership).\n“We’ve seen the high demand for GPU chips, where NVIDIA has been such a strong player, as reflected in the share price and the momentum of their revenues,” Mu says.\nThe next layer was the creation of the large language models, where Mu says several “hyperscalers” are trying to develop tools to challenge ChatGPT. She alludes here to Meta Llama and Google Bard as two that have launched in competition with ChatGPT.\n“The third phase, which we're a long way from, and with questions surrounding how quickly we get to that stage, is how enterprises can build applications on top of all of this, to provide the far-reaching benefits in in this virtual reality/artificial intelligence world,” says Mu.\n“At the moment, we think monetisation is still in the early innings in terms of the adoption and beneficiaries down the line.”\nShe notes that only NVIDIA (NASDAQ: NVDA), through its graphics processing units (GPUs) and Microsoft (NYSE: MSFT) via Copilot and the Office365 suite are reaping the benefits so far.\nMu also explains that AI and machine learning themselves aren’t new, but the language learning models (LLMs) and their applications are.\nHow do you identify Quality names among your focus area of Growth companies?\nMu and her team focus on free cash flow generation, the supply chains, and the business models of companies.\n“We like those companies that are cash flow rich, and on the quality side, corporate governance and capital allocation are also extremely important,” Mu says.\n“The company has to be able to reinvest those strong free cash flows into things that materialise in higher growth of the company or stronger returns.”\nShe also emphasises corporate governance, in the way management is structured and aligned with shareholders.\nWhat is your rationale for not owning the Magnificent 7, given they have performed so strongly? \nWhile their high valuations are part of the reason, the main one for Mu and her team is their strong focus on corporate governance.\n“So, for reasons such as dual share class holdings, as minority shareholders in Meta (NASDAQ: META) and Google (NASDAQ: GOOGL), we don't feel our concerns are well represented, we don't have the same voting rights. Those two mega-cap names don’t necessarily pass our hurdles,” Mu says.\nWhile acknowledging there are strong growth drivers for the mega-cap technology companies, Mu also notes the strong competition between them.\n“You've got Amazon Prime competing with AppleTV, you've got Google with YouTube, and Meta with Instagram, they're all competing for the time spent on digital media.”\nShe also sees similar competition between the LLMs, OpenAI’s ChatGPT and Google Bard (which rebranded as Gemini in recent months).\nOther companies engaged in this “arms race” include Amazon (NASDAQ: AMZN), which is now also pushing into an advertising-driven business model – an area that has so far been dominated by Meta and Google.\n“They're all competing more and more against each other. So, they've got strong free cash flows and they've got all this capital allocation all being pushed into the same areas,” Mu says.\nWhy Nvidia didn’t make the cut\nNvidia was a company the team carefully considered buying but Mu says the stock’s cyclical performance was a turn-off.\n“We have seen peaks and troughs. They did well when they came out in gaming. Then as that demand receded a little, they hit the crypto wave, and now obviously with data centres.\n“For our highly concentrated strategy of only 33 to 35 names, we prefer to play in some of the names that are less cyclical,” Mu says.\nWhy valuations are too rich\nOn the valuation front, she notes the strong fundamentals supporting the mega-caps but says these must be weighed against inflated valuations for some of them.\n“Five years ago, the forward multiple of these mega-cap names was essentially at parity with the rest of the market. Now when you look at the mega caps versus the rest of the market, they're essentially at a 50% premium. How sustainable is that?”\n“As investors, we feel there has to be a broadening out [of competition] and as a result, some of these valuation multiples could come down for these mega-cap names.”\n“We prefer to invest in other parts of the market that have exposure to the same secular growth drivers but are less stretched on a valuation basis.”\nHow are you investing in the space?\nSynopsys (NASDAQ: SNPS)\nMarket cap: US$80.46 billion\n“We are not in Nvidia, but we are in names like Synopsis, which provides electronic design automation tools for chip companies, enabling them to design more complex chips,” Mu says.\n“They're more tied to R&D spend rather than manufacturing spend. We think it provides us with exposure to the same secular growth driver, but without that cyclicality that you might see in other parts of the semiconductor industry.”\nMongoDB (NASDAQ: MDB)\nMarket cap: US$26.68 billion\nComing back to her earlier point about the foundation models of AI and the later applications, Mu says better management of datasets is needed to reach this latter stage.\n“We think a name like MongoDB will benefit because they provide software for these hyper-scalers and for enterprises to draw upon their operational databases and to gather data more efficiently,” she says.\n“The efficiency in terms of what Mongo can provide to enterprises and hyper-scalers in accessing that information is something we think will play well going forward.”\nAnsys (NASDAQ: ANSS)\nMarket cap: US$28.43 billion\nSimulation software company Ansys is another company the Franklin Global Growth Fund is backing. It creates simulation software that supports the chip design functionality of companies such as Synopsis. \nAs Mu explains, it runs simulations, testing and evaluating models to help chipmakers determine whether their designs are accurate and effective.\n“If you can simulate something effectively in your models, enterprises can save money and time in bringing new products to market,” Mu says.\nThe expansion into new vertical markets is another drawcard, with the aerospace and defence sectors some of the next big applications – in addition to the automotive sector where it already operates. \nAccess to global growth\nFrancyne's fund, which has also just listed on the ASX (ASX: FRGG),  seeks to identify companies with long-term competitive advantages in their respective sectors. To learn more about where they are finding the highest growth opportunities, visit their website or fund profile below. \n\n\n\nManaged Fund\nFranklin Global Growth Fund \nGlobal Shares\n\n\nView\n\n\n\n\n\n\n\nNever miss an update\n\n    Enjoy this wire? Hit the ‘like’ button to let us know. \n    Stay up to date with my current content by \n    following me below and you’ll be notified every time I post a wire","kind":null,"is_publish_news":null,"is_publish_highlight":null,"is_publish_live":null,"is_publish_wemedia":null,"editions":null,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.22.4","shortVersion":"4.22.4","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2431027849"}