A headline from 2007
Jon Erlichman
Hedge funds exposure to mega cap tech stocks reaches highest level EVER RECORDED
Source: Barchart, Bloomberg
The last 30 years...
Source: Seek Wiser
Nvidia establishes itself in the $1 trillion club. But expectations for Wednesday's numbers are immense
In Q1, Nvidia $NVDA crushed analysts’ revenue estimates by 10.4% as revenues rose 19% QoQ to $7.19 billion. The strong sequential growth was led by record data center revenue, primarily helped by accelerated computing as generative AI drove high demand for Nvidia’s products. For Q2, Nvidia is projecting revenues of $11B, up 68% QoQ, with a 400 bp increase in gross margins as AI takes center stage. The AI-hype has driven some stocks valuations to extreme levels. Nvidia is the most emblematic one among large-caps is with a P/E ratio which went from under 50x to 224x in just 8 months. Source: Bloomberg
Cloud Infrastructure Services Market
$65 billion in spending in Q2 2023. → +18% Y/Y and +3% Q/Q. Market share: 🟧 $AMZN AWS 32%. 🟦 $MSFT Azure 22%. 🟩 $GOOG GCP 11%. Big 3 = 65% of the market. Estimates by Synergy Research Group. Source: App Economy Insight
The S&P 500 Technology sector forward P/E to that of the SP500 is not as expensive as it was during the Internet bubble
However, the PEG ratio (forward PE divided by consensus long-term EPS growth rate) is roughly at the same level. Source: Game of Trades
There is now a huge divergence between semiconductors share price index and semis monthly sakes
Source: Mac10
‘SPDR S&P Semiconductor ETF’ has the highest 10-year returns at 24%.
They are closely followed by BlackRock’s 'iShares Semiconductor ETF’ at 23.3%. There is a clear pattern here where semiconductor and technology ETFs have achieved the highest returns over the last 10 years. Source: Genuine Impact