To The Moon

Stocks which had previously benefited from the recent artificial intelligence hype took a humble pill last week after Nvidia, arguably the AI bellwether, was hammered down over 8% with the tightening of AI chip exports from US to China, and brought the entire semiconductor sector $Semiconductor Bull 3X Shares(SOXL)$  along with it. $Taiwan Semiconductor Manufacturing(TSM)$ , which is the leading semiconductor foundry supplying to Nvidia, has suffered collateral damage after finding itself caught in the crossfire of the export curbs.

With dim prospects of AI ventures bringing home the bacon in the near term, AI stocks the likes of $Palantir Technologies Inc.(PLTR)$ and $C3.ai, Inc.(AI)$ have been subdued, as investors price in the growing likelihood of interest rate staying higher for longer. With rising conflicts in the Middle East that is threatening to escalate geopolitical tensions and drive up fuel prices, the inflation will probably remain sticky, prompting the Fed to hike its rate again when the Fed officials meet on Oct 31 to Nov 1. Recent rising treasury and corporate bond yields have also added to the borrowing costs, as AI wannabes struggle to make ends meet and finance their AI innovations. These are not helped by slowing demands on the back of an impending recession.

Nevertheless, the Chinese is too huge to be avoided, so I believe that $NVIDIA Corp(NVDA)$ will develop new AI chips to circumvent the export curbs and cater to the Chinese market, like it had done before. With its strong fundamentals and competitive advantage of its technology leadership, Nvidia should be able to weather the prevailing macro headwinds and emerge stronger over time to regain its glory.

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