The surprising metric that tips future company success

LiveWire08-01

Every day, there’s another headline about big US tech, usually focusing on pricing and valuations. Are the Magnificent Seven overvalued? Has Nvidia hit its peak? Hugh Lam, an Investment Strategist at ...

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Has Nvidia hit its peak? Hugh Lam, an Investment Strategist at ...</p>\n\n<a href=\"https://www.livewiremarkets.com/wires/the-surprising-metric-that-tips-future-company-success\">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":"SQQQ","symbol_name":"纳指三倍做空ETF","start_time":0,"source_url":"https://www.livewiremarkets.com/wires/the-surprising-metric-that-tips-future-company-success","article_id":"2456090111","we_media_id":null,"thumbnails":[],"rights":{"source":"livewire_stock","url":"https://www.livewiremarkets.com/wires/the-surprising-metric-that-tips-future-company-success","rn_cache_url":null,"directOrigin":true},"url":"https://stock-news.laohu8.com/highlight/detail?id=2456090111","pubTimestamp":1722474164,"sourceInfo":{"source_id":"livewire_stock","name":"Livewire Markets"},"weMediaInfo":null,"summary":"Every day, there’s another headline about big US tech, usually focusing on pricing and valuations.Are the Magnificent Seven overvalued?Hugh Lam, an Investment Strategist at Betashares, believes investors wondering if today’s heroes can live up to their potential should look at one metric: Research and development (R&D) spending.In a webinar on Wednesday, Lam shared his insights into why this is important and explored alternative AI winners.Lam strongly believes in innovation as a means of success, particularly in the tech space, which is why how much a company spends on its R&D matters.Source: Bloomberg. As of 22 July 2024. Taken from Betashares webinar:Investment Opportunities beyond Nvidia: The next generation of AI winners. Wednesday 31 July 2024.If we turn to that frequently asked question about Nvidia’s prospects, its R&D expenditure represents 11.9% of its sales – and it’s also worth highlighting the volume spent has grown substantially in","collect":0,"end_time":0,"defaultTopTitle":"livewiremarkets.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"SQQQ":"纳指三倍做空ETF","BK4220":"综合零售",".IXIC":"NASDAQ Composite","IE00B4JS1V06.HKD":"JANUS HENDERSON BALANCED \"A2\" (HKD) ACC","IE00B5TLWC47.USD":"BNY MELLON LONG-TERM GLOBAL EQUITY \"B\" (USD) ACC","NVDA":"英伟达","BK4588":"碎股","QLD":"纳指两倍做多ETF","AI":"C3.ai, Inc.","IE00BHPRN162.USD":"BNY MELLON BLOCKCHAIN INNOVATION \"B\" (USD) ACC","GB00B4QBRK32.GBP":"FUNDSMITH EQUITY \"R\" (GBP) INC","BK4561":"索罗斯持仓","TQQQ":"纳指三倍做多ETF","NDQ.AU":"BETASHARES NASDAQ 100 ETF","LU0080751232.USD":"富达环球多元动力基金A","PSQ":"纳指反向ETF","AMZN":"亚马逊","GB00B4LPDJ14.GBP":"FUNDSMITH EQUITY \"R\" (GBP) ACC","IE00BKDWB100.SGD":"PINEBRIDGE US LARGE CAP RESEARCH ENHANCED \"A5H\" (SGDHDG) ACC","IE00BYXW3230.USD":"PINEBRIDGE GLOBAL DYNAMIC ASSET ALLOCATION \"AA\" (USD) ACC","TSM":"台积电","FDN":"First Trust Dow Jones Internet I","IE00BJLML261.HKD":"HSBC GLOBAL EQUITY INDEX \"HCH\" (HKD) ACC","IE00BMPRXN33.USD":"NEUBERGER BERMAN 5G CONNECTIVITY \"A\" (USD) ACC","IE00B775H168.HKD":"JANUS HENDERSON BALANCED \"A5M\" (HKD) INC","IE00BKPKM429.USD":"NEUBERGER BERMAN GLOBAL SUSTAINABLE EQUITY \"A\" (USD) ACC","IE0005OL40V9.USD":"JANUS HENDERSON BALANCED \"A6M\" (USD) INC","XAO.AU":"标普/澳交所 普通股指数","IE00B5949003.HKD":"JANUS HENDERSON GLOBAL TECHNOLOGY AND INNOVATION \"A\" (HKD) ACC","IE000W1ABFV2.USD":"PIMCO BALANCED INCOME AND GROWTH \"R\" (USD) INC","LU0011850046.USD":"贝莱德全球长线股票 A2 USD","XJO.AU":"标普/澳交所 200指数","IE00BWXC8680.SGD":"PINEBRIDGE US LARGE CAP RESEARCH ENHANCED \"A5\" (SGD) ACC","LU0097036916.USD":"贝莱德美国增长A2 USD","XKO.AU":"标普/澳交所 300指数","IE00B19Z8X17.USD":"FTGF CLEARBRIDGE US LARGE CAP GROWTH  \"AG\" (USD) ACC","IE00BD6J9T35.USD":"NEUBERGER BERMAN NEXT GENERATION MOBILITY \"A\" (USD) ACC","BK4567":"ESG概念","IE00BMPRXQ63.HKD":"NEUBERGER BERMAN NEXT GENERATION CONNECTIVITY FUND \"A\" (HKDHDG) ACC","LU0061475181.USD":"THREADNEEDLE (LUX) AMERICAN \"AU\" (USD) ACC","BK4585":"ETF&股票定投概念","QID":"纳指两倍做空ETF","MSFT":"微软","BK4587":"ChatGPT概念","ASIA":"Matthews Pacific Tiger Active ETF","IE00B19Z8W00.USD":"FTGF CLEARBRIDGE US LARGE CAP GROWTH \"A\" INC","ASIA.AU":"BETASHARES ASIA TECH TIGERS","IE0034235303.USD":"PINEBRIDGE US RESEARCH ENHANCED CORE EQUITY \"A\" (USD) ACC","BK4566":"资本集团"},"translate_title":"提示公司未来成功的令人惊讶的指标","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"ASIA":1,"ASIA.AU":1,"NDQ.AU":1,"NVDA":1,"AMZN":0.9,"MSFT":0.9,".IXIC":0.9,"FDN":0.9,"TSM":0.7,"PSQ":0.6,"QID":0.6,"QLD":0.6,"SQQQ":0.6,"TQQQ":0.6,"XAO.AU":0.6,"XJO.AU":0.6,"XKO.AU":0.6,"AI":0.6,"MNQmain":0.6,"NQmain":0.6},"content_text":"Every day, there’s another headline about big US tech, usually focusing on pricing and valuations. Are the Magnificent Seven overvalued? Has Nvidia hit its peak? Hugh Lam, an Investment Strategist at Betashares, believes investors wondering if today’s heroes can live up to their potential should look at one metric: Research and development (R&D) spending.\nIn a webinar on Wednesday, Lam shared his insights into why this is important and explored alternative AI winners.\nWhy R&D matters\nLam strongly believes in innovation as a means of success, particularly in the tech space, which is why how much a company spends on its R&D matters. \nThere’s a strong correlation in the data if you consider R&D spend in the Nasdaq 100 v the MSCI World, or even the ASX 200. Earnings and revenue growth largely matches with R&D expenditure, as per the chart below.\n\n\n\n\n\n\n\n\n\nSource: Bloomberg. As of 22 July 2024. Taken from Betashares webinar: Investment Opportunities beyond Nvidia: The next generation of AI winners. Wednesday 31 July 2024.\nBut taking a specific example, Lam points to Microsoft (NASDAQ: MSFT).\nIf this comes as a surprise, you need to cast your memory back just over 10 years. Microsoft had failed to capitalise on growth in mobile due to its focus on protecting the PC business. Bloomberg is recorded as suggesting that Microsoft wouldn’t survive the ‘innovator’s dilemma’. \nYet here we are today with Microsoft one of the Magnificent Seven. So what changed?\nLam notes that Microsoft had one of the largest R&D expenditure bills from 2011 to 2014 at $40bn. Here’s where things get really interesting. \nA majority of that spend was on cloud computing, a technology that was a disruptor to its own local storage. That investment has had a massive payoff for Microsoft. Its cloud computing offering, Azure, grew 29% yoy for the quarter, with 8% of that growth linked to AI. \nMicrosoft has also looked at ways of further monetising its existing platforms with careful acquisitions. One of these is OpenAI – incidentally, Apple recently announced a partnership to integrate ChatGPT into iOS later this year. \nWho is spending on innovation today?\nWhile anything can change, Lam points out that today’s biggest companies are continuing to spend on R&D in a big way, which should bode well for their future.\n\n\n\n\n\n\n\n\n\nSource: Nasdaq Global Indexes, Bloomberg. Data as of 13 June 2024. Taken from Betashares webinar: Investment Opportunities beyond Nvidia: The next generation of AI winners. Wednesday 31 July 2024.\nIt’s hardly a surprise that Amazon (NASDAQ: AMZN) spends by far the most on innovation with general broker consensus trending on Buy. It has nearly 50% market share in the US and beyond that, has continued to grow and develop its cloud offering with 32% of the market.\nIf we turn to that frequently asked question about Nvidia’s (NASDAQ: NVDA) prospects, its R&D expenditure represents 11.9% of its sales – and it’s also worth highlighting the volume spent has grown substantially in recent years. Latest figures of $8.7bn for fiscal 2024 represent growth of around 500%! \nLam also argues that part of Nvidia’s dominance in the chip market relates to its decision to not lock the technology to its own software – in other words, any developer can use Nvidia’s chips and they are viewed as by far the most superior option on the market for now.\nOther AI winners – looking across the supply chain\nWhen you consider the AI space, there are a few channels to consider and Lam nominates a few major players for each.\n\n\nUpstream represents hardware and physical infrastructure.o   Nvidiao   TSMCo   Wistrono   SK Hynix\n\nCore players are those monetising data with AI.o   Amazono   Microsofto   Apple\n\nDownstream represents those who will utilise services offered by core players, such as in robotics and automation or cybersecurity.o   Keyenceo   C3.aio   Ui Patho   Crowdstrikeo   Ciscoo   Palo Alto\n\nWhat does this mean for Australian investors?\nWhen looking at R&D spend for the ASX 200 compared to Nasdaq, it paints a compelling picture about where you’ll see the biggest future growth in earnings and revenue – though that’s also linked to how our market is structured. Technology – where typically most R&D spend occurs – is underrepresented in the Australian market. \nLam also suggests complementing Australian investments with investments in innovation could be valuable to ongoing growth in your portfolio, for example, by using ETFs like Betashares Nasdaq 100 ETF (ASX: NDQ) or Betashares Asia Technology Tigers ETF (ASX: ASIA).\nBut beyond that, it’s a lesson in looking deeper when you invest. Don’t ignore R&D expenditure when you look at the fundamentals because data suggests that could be critical when it comes to picking future leaders.\n\n\n\nETF\nBetashares NASDAQ 100 ETF (NDQ)\nGlobal Shares\n\n\nView\n\n\n\n\n\n\nETF\nBetashares Asia Technology Tigers ETF (ASIA)\nGlobal Shares\n\n\nView\n\n\n\n\n\n\n\nNever miss an update\n\n    Enjoy this wire? 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