00:00 Speaker a
This is a big story this week, with Broadcom shattering its second-quarter earnings estimates, but that outlook has not impressed investors. Still, chipmakers' AI revenues rose 46% from the previous year. Join now and you'll find Kimberly Forest, Founder and Chief Investment Officer of Boca Capital Partners. You said AI trades are back. I mean, did you leave? How do you view Broadcom now?
00:37 Kimberly Forest
Well, I think they are a very confusing company if you are an AI-oriented investor because the chip sector of that company or its chip segment is relatively small but important. We know that, but like everything from MainFrame to uh to vmware, there's a lot of weird hardware rolling around the halls of Broadcom. So it's a strange stock and it's like it's reflected in today's prices.
02:15 Speaker a
So, with that in mind, can you talk a bit about what makes a company like Kimberly, Broadcom become a pure AI play for investors like you to bully it a little more?
02:34 Kimberly Forest
of course. Well, they can do something weird like unfolding a part of it. Maybe um, chipsets, chip sector, um, you're just turning it, but you'll remain the majority owner of the company. And it can directly show the growth that a company can achieve through AI. God knows they're talking a lot about it, but um, it's going to limit this company at some point until investors can see its pure growth.
03:54 Speaker a
Is there a better long-term play here that appears to be more stable than Broadcom within this AI trade?
04:14 Kimberly Forest
I don't know. So, the good thing about Broadcom software exposure is that it gives it stability. Um, yes, the mainframe market is not growing. The VMware market is not growing, and the other software is not growing at the same speed as AI, but it offers lovely pension-like revenue so that you can invest in something like chips that bring to the market. So, if you're a nervous AI investor, then Broadcom is probably for you. Well, pure play is nvidia at this point. Um, they have the tips people want, um, they are willing to pay for their premium pricing, and that doesn't seem to be a replacement at this point. So, uh, if you want a direct line for any kind of AI, the way to play it is nvidia for now.
06:05 Speaker a
And when you consider Nvidia's growth outlook amid some of the geopolitical tensions, it is clearly that Nvidia is caught up in the chip export curb intersection between the US and China.
06:38 Kimberly Forest
I'm not particularly worried, but the company had been directly appealing to the government to allow exports, as Jensen Wong was on TV at the end. Well, he's always pointing out that 50% of AI is developed in China, and having a US-based hardware platform under development would not be a good thing. And for now, the answer is no for many reasons, and perhaps the biggest reason is that they have consumer-oriented AI or military use, which I think is difficult to avoid. So I think that nvidia is making less capable chips in the Chinese environment, perhaps the best that the company and the government can do at this point.
