Nvidia is one of the few companies that can sustain a recovery in U.S. stocks this year, despite rapid advances in artificial intelligence that have “more losers than winners,” said a recent U.S. chipmaker. said one of the biggest stock buyers.
Silicon Valley-based Nvidia, whose technology underpins AI applications like ChatGPT, hit a $1 trillion valuation last week as investors flocked to companies seen as the biggest beneficiaries from AI development. Became the first chip manufacturer.
“In the context of NVIDIA, it is [AI] There will be winners and losers. . . “There are more losers than winners,” said Rajiv Jain, founder and chief investment officer of GQG Partners, which disrupts business models across industries.
“The most obvious winners at the moment will be the larger tech companies besides NVIDIA, whether it’s Alphabet or Meta or those sort of names,” he added. GQG Partners bought his Nvidia stake in the first quarter for $2.3 billion and has since added more shares.
Nvidia’s stock has soared 170 percent this year, adding $575 billion to the group’s market capitalization, only behind the $721 billion and $654 billion from Apple and Microsoft respectively.
The S&P 500 index is up 9% this year, continuing a recovery that began in October.
While many semiconductor companies are likely to benefit from high barriers to entry and strong demand for their chips, Jain said, some software and IT services companies believe AI will automate parts of their business and He said automating “a lot of it” could put him on the “losing side.” The underlying work being done becomes redundant. ”
But, as he did during the dot-com boom, he warned: . . No one could have predicted that Amazon would be the winner unless they were betting on Jeff Bezos. It’s easy to say I did it, but there were hundreds of startups in e-commerce. And, of course, the company itself has changed dramatically over the years. ”
Jain launched Florida-based GQG seven years ago. Assets reached nearly $100 billion for the first time after a $5 billion inflow in the first quarter.
The company rose to prominence earlier this year by plowing $1.9 billion into Indian conglomerate Adani Group after it was attacked by U.S. short sellers, wiping up to $145 billion from its market capitalization. Since then, the company has increased its stake in Adani Group companies.
The “choke” for restructuring Nvidia’s stock was the arrival of artificial intelligence chatbot ChatGPT. Jain credits this with his Nvidia’s “earnings step function.” GQG first acquired Nvidia in 2017, but sold it 18 months ago over concerns about its high valuation.
Demand for Nvidia’s H100 chip surged with the launch of ChatGPT last November. The group’s CEO Jensen Huang described it as “the world’s first computer.” [chip] “Designed for Generative AI” is an artificial intelligence system that can rapidly create human-like text, images, and content.
Last month, Nvidia announced sales forecasts that exceeded Wall Street expectations by more than 50 percent.
Jain pointed to a divergence within the tech sector, with the profitable tech giants, which make up a huge chunk of stock market indices, separating from the loss-making ones, in the final stages of a pandemic-fueled bull market. He pointed out that it had jumped.
“There were more delusional thoughts in 2021. There are less delusionals now,” he said. “Quality growth on the technical side is back in the frame.”
The main obstacle for Nvidia is meeting demand, Jain said. “Companies are always missing out on profits because they can’t keep up with demand,” he said. “That’s what he thinks is the biggest problem facing Nvidia at the moment.”
