US Stock Indices Open Strong and Close Higher, $Tesla Motors(TSLA)$ Recovers Losses
In the coming age of AIDC, market focus is making adjustment, shifting gradually to infrastructure (including electricity) and applications.
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| Market recap
Last Friday, US stocks opened strong and closed higher, with all three major indexes finishing in the green. The S&P 500 and Nasdaq indexes ended their five-day losing streak. $Tesla Motors(TSLA)$ gained more than 8%, while $Apple(AAPL)$ and $Netflix(NFLX)$ saw slight declines. $NASDAQ Golden Dragon China Index(HXC)$ rose 0.93%, with $Kingsoft Cloud Holdings Ltd(KC)$ up over 5% and $Li Auto(LI)$ rising more than 3%.
- Megacaps:
$NVIDIA(NVDA)$ opened higher and closed up 4.45%, bringing its market cap to $3.54T. CEO Jensen Huang is going to give the unofficial opening speech at CES 2025 on January 6 (Pacific Time), where the new RTX 5090/5080 graphics cards are expected to be unveiled.
- Dive deeper:
Guesses are that Nvidia will announce its entry into the AI PC market at CES 2025. Additionally, Nvidia is expected to make significant updates to its overall robotics strategy, aligning with the emerging trend of embodied intelligence.
- Highlights:
Nvidia-related stocks saw a boost, with $Cerence Inc.(CRNC)$ , a company specializing in in-car AI voice technology, soaring ~144%. Cerence announced it would expand its partnership with Nvidia to enhance language model performance in automotive systems.
$Microsoft(MSFT)$ also revealed plans to invest $80 billion in data centers (AIDC) for the 2024 fiscal year, causing nuclear energy stocks to rise. The demand for electricity generated by these data centers pushed $Oklo Inc.(OKLO)$ up - ~25%, $NuScale Power(SMR)$ up ~18%, and $NANO Nuclear Energy Inc(NNE)$ up ~13%.
A statement from the US Treasury Department further fueled a surge in real estate stocks. $Fannie Mae(FNMA)$ saw its stock price rise by ~30%, while $Freddie Mac(FMCC)$ surged over 28%, both hitting multi-year highs.
| The age of AIDC
The competition in the AI chip market is intensifying, with the demand for AI computing power continuing to rise. As this demand grows, the internal network connectivity within data centers is becoming increasingly important.
Given the seemingly sky-high valuations of AI computing power, investors may be starting to feel uneasy about the high prices.
Rationally speaking, after impressive high-speed growth, it’s natural for performance growth to slow down. Chip companies that no longer deliver the same jaw-dropping results face limited upside potential in their stock prices.
| Beyond Nvidia
In the future, the focus of the market is expected to gradually shift from computing power to other AI infrastructure elements (including electricity) and applications.
- ALAB provides data center connectors that improve data transfer efficiency between servers, reducing latency and data loss.
- Nvidia’s Blackwell chips use ALAB’s products. Additionally, Amazon is not only Astera Labs' first customer but also a strategic investor in the company.
- Marvell holds a dominant position among cloud computing clients, offering larger growth potential, wiht a valuation that is more reasonable (read: less lunatic).
- The AI data center business is Marvell’s largest revenue source, benefiting from support from major clients: Amazon, Google, and the like.
- Marvell has positioned itself in the top tier of ASIC design.
- Broadcom has spent years developing its expertise in the communications field, maintaining a technological advantage in the data center network domain.
- The company holds 70% of the market share in the ASIC market.
- In addition to its custom XPU solutions, Broadcom’s Tomahawk and Jericho series are designed specifically for AI data centers.
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