Asia and Global Semiconductor and Tech Research

Andrew Lu

Thematic (Sector/Industry)

<ul>
<li>After our global server market model update, we see 3Q23 server market decline and data center vendors' capex cut not consistent with Nvidia's robust y/y sales growth of over 200%;</li>
<li>Discrepancy: 1. Nvidia gaining value on AI server, losing zero on non AI; 2. AI servers grow at the expenses of non AI; 3. most vendors not only in server;</li>
<li>Different from  consensus view, we expect general (non AI) server market to decline 16% y/y in 2024 and 29% in 2025 and suggest to avoid general server supply chain vendors.</li>
</ul>


After our global server market model update, we see 3Q23 server market decline and data center vendors' capex cut not consistent with Nvidia's robust y/y sales growth of over 200%;
Discrepancy: 1. Nvidia gaining value on AI server, losing zero on non AI; 2. AI servers grow at the expenses of non AI; 3. most vendors not only in server;
Different from  consensus view, we expect general (non AI) server market to decline 16% y/y in 2024 and 29% in 2025 and suggest to avoid general server supply chain vendors.


What to Avoid if AI Server Will Continue to Squeeze General Server Market in 2024-2025?

Managing Director, Zero One, Zero One

Vincent Fernando, CFA

Managing Director, Zero One

Zero One

Founded in 2015, Zero One produces independent investment research and provides corporate finance advisory services with a focus on both listed and private technology companies. Founder Vincent Fernando has over 20 years of experience in US and Asia capital markets.

Independent Investment Research

Equity Bottom-Up

<ul>
<li>Nvidia's street-beating results indicate strong growth to continue; Generative AI demand will next expand from startups, consumer internet, and cloud service providers increasingly to enterprise AI-linked demand.</li>
<li>Nvidia is not expensive despite recent market concerns. We believe Nvidia can meet or even beat its current calendar year 2024 earnings expectations and forward PE is cheap.</li>
<li>Short a basket of Taiwan AI concept stocks vs. a core Nvidia long position rather than take profits in Nvidia. We have swapped one Taiwan stock in our short basket.</li>
</ul>


Nvidia's street-beating results indicate strong growth to continue; Generative AI demand will next expand from startups, consumer internet, and cloud service providers increasingly to enterprise AI-linked demand.
Nvidia is not expensive despite recent market concerns. We believe Nvidia can meet or even beat its current calendar year 2024 earnings expectations and forward PE is cheap.
Short a basket of Taiwan AI concept stocks vs. a core Nvidia long position rather than take profits in Nvidia. We have swapped one Taiwan stock in our short basket.


Nvidia Still Cheap: Enterprise AI Next Driver to Kick-In; Adjusting Our Taiwan AI Plays Short Hedge

<ul>
<li>TSMC's manufacturing value only accounts for 1/4 of H100 HGX bill of materials but HBM3 accounts for more than half;</li>
<li>ABF substrate, SXM5 module, UBB and CCL vendors should be benefited, especially for Ibiden Co Ltd (4062 JP) on ABF substrate/OAM and Elite Material (2383 TT) on OAM/UBB CCL;</li>
<li>Nvidia AI GPU likely doubling each year in next two years; Our estimates on Nvidia 2025 AI GPU EPS contribution are exceeding Bloomberg consensus earnings estimates, suggesting room to raise.</li>
</ul>


TSMC's manufacturing value only accounts for 1/4 of H100 HGX bill of materials but HBM3 accounts for more than half;
ABF substrate, SXM5 module, UBB and CCL vendors should be benefited, especially for Ibiden Co Ltd (4062 JP) on ABF substrate/OAM and Elite Material (2383 TT) on OAM/UBB CCL;
Nvidia AI GPU likely doubling each year in next two years; Our estimates on Nvidia 2025 AI GPU EPS contribution are exceeding Bloomberg consensus earnings estimates, suggesting room to raise.


BOM Cost and CoWoS Demand Analysis on Nvidia AI GPU HGX for 2023-2025, Room to Raise Estimates

<ul>
<li>Taiwan's AI supply chain names have fallen over the last month, yet many have still outperformed Nvidia by a wide margin over the last six months.</li>
<li>We don't want to sell our Nvidia despite market risks -- We believe a basket of Taiwan AI stocks can act as a Short to hedge a Long Nvidia position.</li>
<li>Shorting a basket of Wistron, Quanta, Gold Circuit, and Asia Vital Components can act as a hedge vs. a Long Nvidia position. Below we explain why.</li>
</ul>


Taiwan's AI supply chain names have fallen over the last month, yet many have still outperformed Nvidia by a wide margin over the last six months.
We don't want to sell our Nvidia despite market risks -- We believe a basket of Taiwan AI stocks can act as a Short to hedge a Long Nvidia position.
Shorting a basket of Wistron, Quanta, Gold Circuit, and Asia Vital Components can act as a hedge vs. a Long Nvidia position. Below we explain why.


Taiwan AI Supply Chain Names: Four AI Plays to Short as Hedge Vs. An Nvidia Long

Equity Long-Short, Semiconductors, Fabricated Knowledge

Douglas O'Laughlin

Equity Long-Short, Semiconductors

Fabricated Knowledge

Learn more about the world's most important manufactured product. Meaningful insight, timely analysis, and an occasional investment idea.

Equity Capital Markets

<ul>
<li>ARM prices this Wednesday and trades on Thursday.</li>
<li>I have a lot of thoughts. This will be a great post if you want to learn about ARM. </li>
<li><span style="font-size: var(--content-font-size);">So, without further adieu, let’s dive into the most important IP company in the world.</span></li>
</ul>


ARM prices this Wednesday and trades on Thursday.
I have a lot of thoughts. This will be a great post if you want to learn about ARM. 
So, without further adieu, let’s dive into the most important IP company in the world.


United States

NVIDIA Corporation designs, develops, and markets three dimensional (3D) graphics processors and related software.  The Company's products provide interactive 3D graphics to the mainstream personal computer market.

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NVIDIA Corp (NVDA US)

What to Avoid if AI Server Will Continue to Squeeze General Server Market in 2024-2025?

Names to Avoid if AI Server Will Continue to Squeeze General Server Market in 2024-2025? Different from consensus, we expect non AI server market...

Andrew Lu

Nvidia Still Cheap: Enterprise AI Next Driver to Kick-In; Adjusting Our Taiwan AI Plays Short Hedge

Short a basket of Taiwan AI concept stocks vs. a core Nvidia Long position rather than take profits in Nvidia. We have swapped one stock in our...

Vincent Fernando, CFA

BOM Cost and CoWoS Demand Analysis on Nvidia AI GPU HGX for 2023-2025, Room to Raise Estimates

After conducting our in depth bill of materials and CoWoS demand analysis on Nvidia H100 AI GPU HGX for 2023-2025, we conclude Bloomberg estimates...

Andrew Lu

Taiwan AI Supply Chain Names: Four AI Plays to Short as Hedge Vs. An Nvidia Long

Taiwan's AI supply chain names have fallen over the last month, yet many have still outperformed Nvidia by a wide margin over the last six months.

Vincent Fernando, CFA

ARM IPO Breakdown

ARM prices this Wednesday and trades on Thursday. I have a lot of thoughts. This will be a great post if you want to learn about ARM. So, without...

Fabricated Knowledge

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