Latest news with #chips
Yahoo
39 minutes ago
- Business
- Yahoo
Dan Niles Explains Why He Turned Bullish on NVIDIA (NVDA)
Nvidia is one of the . Dan Niles, Niles Investment Management founder and portfolio manager, said in a recent program on CNBC that he turned bullish on NVIDIA Corp (NASDAQ:NVDA) for two reasons. The first was the company's China write-down after the US government imposed new restrictions on AI chip sales. The second was related to the core dynamics of the AI industry fueling demand: 'So training spending is slowing down, but you finally had inference spending picking up. And so that means people are going to ChatGPT, OpenAI, Gemini, which is the one I use a lot. I probably use it 10 to 20 times a day. And you had inference demand really start to take off. Google talked about the fact that in the month of May, the tokens that they were generating were up 50 times year-over-year. And then Microsoft, which obviously was invested in OpenAI back in 2019 before any of us had even heard of ChatGPT in 2022, they came out and said, 'Hey, we have a 5x increase in the number of tokens we're generating. And so you put all that together, companies forecast derisks because of that massive write-down, some of the sovereign AI demand as President Trump went to the Middle East and you had all these deals, all of that stuff.' NVDA is back in the game as even its skeptics are turning bullish amid strong demand for its chips. But Nvidia could face tough competition in the future. Major competitors like Apple, Qualcomm, and AMD are vying for TSMC's 3nm capacity, which could limit Nvidia's access to these chips. Why? Because Nvidia also uses TSMC's 3nm process nodes. Nvidia is also facing direct competition from other giants that are deciding to make their own chips. Amazon, with its Trainium2 AI chips, offers alternatives. Trainium2 chips could provide cost savings and superior computational power, which could shift AI workloads away from Nvidia's offerings. Mar Vista Global Quality Strategy stated the following regarding NVIDIA Corporation (NASDAQ:NVDA) in its second quarter 2025 investor letter: 'NVIDIA Corporation (NASDAQ:NVDA) shares rebounded from their calendar Q1 lows as investor concerns over DeepSeek's efficiency gains and U.S. government restrictions on advanced AI semiconductors, such as NVIDIA's H20 family of GPUs, proved overstated. Demand for NVIDIA's next-generation Blackwell platform remains strong, fueled by the growing complexity of large language models and the emergence of reasoning-based applications. As CEO Jensen Huang noted, reasoning tasks can require up to 10 times the compute power of training a conventional large language model. With the AI market still in the early stages of a multi-year infrastructure build-out, NVIDIA is well-positioned to capture significant value as the industry standard for accelerated computing.' Photo by AlphaTradeZone While we acknowledge the potential of NVDA as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an extremely cheap AI stock that is also a major beneficiary of Trump tariffs and onshoring, see our free report on the . READ NEXT: 30 Stocks That Should Double in 3 Years and 11 Hidden AI Stocks to Buy Right Now. Disclosure: None. This article is originally published at Insider Monkey.
Reuters
5 hours ago
- Business
- Reuters
Texas Instruments shares sink as tariff risks cloud chip demand outlook
July 23 (Reuters) - Texas Instruments (TXN.O), opens new tab shares slumped nearly 12% in premarket trading on Wednesday, after its quarterly profit forecast indicated a hit to demand for its analog chips that stoked investor fears of tariff-related disruptions. The dour third-quarter profit forecast contrasts with its earlier hopes for a strong rebound in chip demand, increasing concerns about tariff impacts and tempering investor confidence. In response to analysts' questions on a post-earnings call about whether tariffs were prompting customers to pull in orders and bumping up revenue, TI CEO Haviv Ilan said he "can't rule out the possibility". "(TI's) tone has shifted markedly vs last quarter's call as well as vs management's intra-quarter commentary, with seemingly more caution around the geopolitical and tariff environment," said Bernstein analyst, Stacy Rasgon, adding that the shift "felt somewhat sudden". Chipmakers like TI are not directly affected by Trump's higher tariffs yet, but rising costs for chip-making tools and reduced spending by some customers are starting to have an impact. This was evident in the broader semiconductor industry, with both ASML ( opens new tab, the biggest supplier of chip-making equipment globally, and TSMC ( opens new tab, the world's biggest chipmaking factory, last week, warned about tariff-related uncertainty. "The impact of tariffs/trade is beginning to emerge and we anticipate a continuation of a slightly weaker than seasonal demand environment as the year progresses due to the impact of tariffs," said analysts at J.P. Morgan. Some analysts also expressed concerns about pressure to TI's margins due to the company's rising investments to expand its U.S. manufacturing footprint. Following the results, at least six brokerages cut price targets on the stock, while three raised, as per data compiled by LSEG. The firm is up about 15%, while peer Analog Devices (ADI.O), opens new tab has gained around 11%, so far this year. TI has a 12-month forward price-to-earnings ratio of 34.66, compared to Analog Devices' 27.64.
Reuters
6 hours ago
- Business
- Reuters
Texas Instruments slumps as tariff uncertainty hits demand
July 22 (Reuters) - Texas Instruments' (TXN.O), opens new tab quarterly profit forecast failed to impress investors as it pointed to weaker-than-expected demand for its analog chips from some customers and underscored tariff-related uncertainty. Shares in the company slumped 12% in early European trading on Wednesday, tracking losses in extended trading on Wall Street on Tuesday. The shares have risen more than 13% this year. Chipmakers such as Texas Instruments do not directly face U.S. President Donald Trump's elevated tariffs yet, but the cost of chip-making tools has risen, and some of their end customers have pared back spending. "Tariffs and geopolitics are disrupting and reshaping global supply chains," CEO Haviv Ilan said on a post-earnings call. "Automotive recovery has been shallow." TI expects third-quarter earnings between $1.36 per share and $1.60 per share, the midpoint of which was below analysts' estimates of $1.49 per share, according to data compiled by LSEG. It expects revenue between $4.45 billion and $4.80 billion, compared with market expectations of $4.59 billion. The chipmaker reported sales of $4.45 billion for the second quarter, beating estimates. ASML ( opens new tab, the biggest supplier of chip-making equipment globally, warned last week that it might not achieve revenue growth in 2026, as uncertainty in tariff talks has spurred U.S. chipmakers to delay finalizing investments. TSMC, the world's biggest chipmaking factory, said last week that it was being conservative with its outlook to account for tariff-related disruption. In response to analysts' questions on a post-earnings call about whether tariffs were prompting customers to pull in orders and bumping up revenue, TI CEO Ilan said he "can't rule out the possibility." "When you see such a strong behavior in quarter two versus quarter one, you have to attribute some of it to the tariff environment," he said. Analysts also grilled TI executives on what they characterized as a change in tone in remarks from the previous quarter, when leadership had touted indications of a significant demand rebound, independent of tariff-related factors. "Management voiced caution as they saw some normalization of orders through the second quarter," said Summit Insights analyst Kinngai Chan. TI has made big investments to expand its capacity for cost-effective 300-millimeter wafer manufacturing technology and plans to shell out more than $60 billion to expand its U.S. manufacturing footprint. The company also expects factory loadings in the third quarter to remain at the same level as the second quarter, which could hurt margins, Stifel analyst Tore Svanberg said, referring to the volume of chips being manufactured. Increasing factory loadings spreads out fixed costs over more output, typically improving margins. Svanberg said TI's stock fell post-market because "investors were expecting somewhat more, especially for the third quarter outlook," including for gross margins. CFO Rafael Lizardi said TI expects gross margin growth to be flat in the third quarter. The company's profit outlook does not include changes related to recently enacted U.S. tax legislation, TI said, after Trump signed into law a massive package of tax and spending cuts earlier this month. TI expects the new tax regime to result in a higher tax rate in the third quarter and through 2025, which will eventually decrease in 2026 and beyond, Ilan said.
Reuters
15 hours ago
- Business
- Reuters
Texas Instruments slumps as tariff uncertainty weighs on demand
July 22 (Reuters) - Texas Instruments' (TXN.O), opens new tab quarterly profit forecast failed to impress investors as it pointed to weaker-than-expected demand for its analog chips from some customers and underscored tariff-related uncertainty. Shares of the company slumped 11.4% in extended trading on Tuesday. They have risen more than 13% so far this year. Chipmakers such as Texas Instruments do not directly face U.S. President Donald Trump's elevated tariffs yet, but the cost of chip-making tools has risen, and some of their end customers have pared back spending. "Tariffs and geopolitics are disrupting and reshaping global supply chains," CEO Haviv Ilan said on a post-earnings call. "Automotive recovery has been shallow." TI expects third-quarter earnings between $1.36 per share and $1.60 per share, the midpoint of which was below analysts' estimates of $1.49 per share, according to data compiled by LSEG. It expects revenue between $4.45 billion and $4.80 billion, compared with market expectations of $4.59 billion. The chipmaker reported sales of $4.45 billion for the second quarter, beating estimates. ASML ( opens new tab, the biggest supplier of chip-making equipment globally, warned last week that it might not achieve revenue growth in 2026, as uncertainty in tariff talks has spurred U.S. chipmakers to delay finalizing investments. TSMC, the world's biggest chipmaking factory, said last week that it was being conservative with its outlook to account for tariff-related disruption. In response to analysts' questions on a post-earnings call about whether tariffs were prompting customers to pull in orders and bumping up revenue, TI CEO Ilan said he "can't rule out the possibility." "When you see such a strong behavior in quarter two versus quarter one, you have to attribute some of it to the tariff environment," he said. Analysts also grilled TI executives on what they characterized as a change in tone in remarks from the previous quarter, when leadership had touted indications of a significant demand rebound, independent of tariff-related factors. "Management voiced caution as they saw some normalization of orders through the second quarter," said Summit Insights analyst Kinngai Chan. TI has made big investments to expand its capacity for cost-effective 300-millimeter wafer manufacturing technology and plans to shell out more than $60 billion to expand its U.S. manufacturing footprint. The company also expects factory loadings in the third quarter to remain at the same level as the second quarter, which could hurt margins, Stifel analyst Tore Svanberg said, referring to the volume of chips being manufactured. Increasing factory loadings spreads out fixed costs over more output, typically improving margins. Svanberg said TI's stock fell post-market because "investors were expecting somewhat more, especially for the third quarter outlook," including for gross margins. CFO Rafael Lizardi said TI expects gross margin growth to be flat in the third quarter. The company's profit outlook does not include changes related to recently enacted U.S. tax legislation, TI said, after Trump signed into law a massive package of tax and spending cuts earlier this month. TI expects the new tax regime to result in a higher tax rate in the third quarter and through 2025, which will eventually decrease in 2026 and beyond, Ilan said.
Yahoo
19 hours ago
- Business
- Yahoo
Nvidia Stock Warning: This NVDA Challenger Just Scored a Major Customer
Image of Jensen Huang by jamesonwu1972 via Shutterstock Nvidia (NVDA) shares inched down today, July 22, after FuriosaAI said it has landed LG as its first major customer. FuriosaAI is a startup based out of Seoul, South Korea that's committed to designing chips, which rival NVDA in terms of performance, efficiency, and cost effectiveness. More News from Barchart Despite today's decline, Nvidia stock is up nearly 95% versus its year-to-date low set in early April. Why Is FuriosaAI's Announcement Significant for Nvidia Stock? FuriosaAI's most advanced artificial intelligence chip dubbed 'RNGD' will power LG's 'Exaone' large-language models (LLMs), according to the startup's press release on Tuesday. It's a meaningful development for NVDA investors given it signals growing enterprise confidence in alternatives to Nvidia's GPUs. This public endorsement from a global technology giant could accelerate adoption of non-Nvidia solutions, especially in Asia's booming AI ecosystem. For Nvidia, it raises competitive pressure and questions about future market share, particularly as startups like FuriosaAI gain traction with high-profile clients. Note that the RNGD chip delivers 2.25x better performance per watt and offers a lower total cost of ownership compared to conventional graphics processing units. Is LG Choosing FuriosaAI a Reason to Sell NVDA Shares? Investors should note, however, that FuriosaAI's announcement is not a big enough reason to sell Nvidia shares especially since the Korean startup is privately held and so NVDA is not really in competition with it for institutional capital. In fact, Morgan Stanley analysts view NVDA stock as a 'top idea' heading into the AI darling's earnings print scheduled for the final week of August. The investment firm recommends sticking with Nvidia stock despite its monster run since April as it's 'expecting the pace of revenue and EPS upside to accelerate on the earnings report, driving compelling risk reward into the quarter.' Wall Street Has a Consensus 'Strong Buy' Rating on Nvidia Nvidia stock is worth owning at current levels because other Wall Street firms continue to see it as a core holding for 2025 as well.
