Semi earnings coming! Thoughts on this?
Hmmm. [Gosh] Big tech isn't dead, while there were minimal changes to earnings estimates in aggregate, this was better than feared heading in - they weren't dead, but only resting. There are two main themes in tech worth considering right now are cloud and artificial intelligence (AI). The momentum on AI was clearly starting to build, as recent earnings transcripts were peppered with AI references. And not because of AI or anything else, I'm normally very skeptical of claims of the next transformative tech breakthrough, but the AI momentum is no segway and it is real. This one really has some legs in terms of playing it. AI took the world by storm earlier this year and it’s one of the most exciting performance ever as ChatGPT made headlines , causing analysts and fund managers alike to turn bullish on companies benefiting from the trend – from Big Tech to chipmakers. Another really exciting area yet to be explored is the creation of verticals that sit on top of large language models like ChatGBT. Large language models, or LLMs, are programmed to understand human language and generate responses based on large sets of data. Whether that's around legal or finance or travel, you can see some really powerful tools being developed. And I really do think that's where we could see the next Microsoft or Google or Amazon really start to emerge. [Sly]
Microsoft $Microsoft(MSFT)$ is my first “port of call" if I want to delve into AI. The tech giant plays into the theme across a number of different areas including its cloud business, and an extension of AI features into its Office 365 software. You can see the uplift in terms of output when you start to push those AI capabilities through that broad Microsoft product set and across what is around 500 million commercial customers. The upward inflection in terms of earnings can be quite remarkable. Chip stocks Semiconductor firms will also gain from the infrastructure that sits behind AI, Nvidia and AMD as top picks. However, be warned to be selective in making sure the "juice hasn't been factored into" the share prices. [Onlooker]
$ON Semiconductor(ON)$ is my second pick which is another semiconductor pick. “Despite concerns for some peers in auto semis, ON continue to deliver. Great result with exceptional execution around the development of their silicon carbide business. Auto demand continues to hang in as the broader EV adoption trends remain on track." CNBC noted. [Observation]
Modify on 2023-07-23 11:36
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