To The Moon

ChatGPT, the 🤖AI-powered Chatbot by start-up OpenAI was released to the public on 30 Nov. Since then, it has become 1 of the biggest buzzwords & is seen as a revolutionary moment in the 🌎 of technology. In fact, some think that ChatGPT will mark the end of Google Search as we know it, & the product has already set alarm bells ringing at the search giant. The shockingly good 🤖 chatbot reached 1 million users within 5 days😱 In comparison, Facebook took around 10 months to cross 1 million users after its launch in Feb 2004. If 🤖 is going to take over the tech 🌎 in then next few months, these are the chip companies that I’m most🐂-ish for:

🥇 NVDA:

⭐️ 🤖 requires the massive parallel processing capabilities of graphics processing units (GPUs) to run, & the outright leader in GPUs is 🥁🥁🥁NVDA❣️ ChatGPT runs on the older NVDA A100 chips, released 2 years ago.

⭐️ NVDA’ s latest chip, the H100, or "Hopper," was released late 2022 is projected to perform 🤖 "training" functions at 9 times the speed of the A100, & reacting to a question/other stimulus will be at 30 times the speed😮😮😮

⭐️ The H100 promises 3.5 times better energy efficiency & 3 times lower total cost of ownership.

⭐️ NVDA is also unveiling its 1st CPU (Grace) this year, which is specifically designed to work in conjunction with Hopper NVDA’s networking-oriented data center processing units (DPUs). Together, these complete 🤖 systems should enable ultra-fast networking & movement of data within a system, in addition to ultra-fast GPU processing.

⭐️ While NVDA’s gaming chip revenue plunged the most recently reported earnings because of the video game pandemic hangover & cryptocurrency 🐻 market, its data center revenue was up an impressive 31%.

⭐️ The production of NVDA GPUs depends on these TSM & ASML.

⭐️ The current consensus among 44 polled investment analysts is BUY with 3 Outperform, 14 Hold, & 2 Sell Ratings. The 38 analysts offering 12-month price forecasts for NVDA have a median🎯 of $262.50, with a high🎯 of $350.00 & a low🎯 of $110.00

🥈ASML:

⭐️ Has a monopoly on key technology used in producing leading-edge semiconductors, called extreme ultraviolet lithography (EUV) & commands 85% of the global market in lithography machines that expose device patterns on silicon wafers using ultraviolet light.

➡️ As leading-edge chip companies began making semiconductors with transistors less than 10nm apart, the extremely fine lasers of EUV technology became necessary.

⭐️ Given that 🤖 applications require the most transistor-dense, power-efficient chips in order to run, the 🤖 competition will put demands on chip foundries to produce more & more leading-edge chips. That means more purchases of ASML's machines.

⭐️ Received 30.7 billion euros worth of bookings in 2022, which was more than its annual revenue of 21 billion euros. It also has a huge backlog of orders worth 40 billion euros, which is the reason why ASML expects at least 25% revenue growth in 2023. With the addition of new catalysts such as generative AI and the secular growth of the semiconductor market, I am 🐂-ish for ASML.

⭐️ The current consensus among 33 polled investment analysts is Buy with 1 Outperform, 4 Hold, & 1 Sell Ratings. The 7 analysts offering 12-month price forecasts for ASML have a median🎯 of $775 with a high🎯 of $850 & a low🎯 of $700.

🥉TSM:

⭐️ Lithography must work in conjunction with masking equipment, etch & deposition machines, metrology & inspection machines, & advanced packaging in order to create these incredibly complex chips without any defects & that’s why TSM has a competitive moat of its own, due to its years of experience as the 🌎’s largest outsourced foundry.

⭐️ Years ago, TSM surpassed INTC in producing leading-edge chips, & it only appears to be widening that lead given TSM's size & scale advantage, as well as INTC's current difficulties from its exposure to the weak PC market.

⭐️ As of the Q4 2022, TSM produced more than 56% of the 🌎's semiconductors, with an even higher share on the leading edge.

⭐️ TSM, an ASML customer, got 54% of its revenue from selling 7nm & 5nm chips in the Q4 2022. For perspective, the company generated $20.5 billion in revenue during the quarter, which shows the massive size of the market for advanced chip nodes.

⭐️ This year, TSM plans to introduce 3nm chips, which will be followed by 2nm chips in 2025. TSM’s supply of 3nm chips is already sold out as demand for them is higher than what the company can supply this year.

⭐️ TSM’s management also emphasised its high-performance computing segment for 🤖 customers as the reason for its optimism over a recovery in the semiconductor market in 2H 2023.

⭐️ The current consensus among 39 polled investment analysts is Buy with 5 Outperform, & 3 Hold Ratings. The 7 analysts offering 12-month price forecasts for TSM have a median🎯 of $110, with a high estimate o$580 & a low🎯 of $75.

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