Investments and Portfolios

Not really-they write what pays

@Adam-Kay said in Nvidia News: I had to think about that for a mo Rare Earth Metals and China-have I got that right

We have now entered a possible reporting window, where SM could pre announce earnings. So it is worth a recap of where we are and what we want to hear/see in the coming days/weeks. Could SM announce Q4(set) early. Possibly. They guided 5.6-6.4b and a conservative EPS. The focus more me is Gross Margin. 9.6% in Q3 was poor, but there are reasons why it should almost certainly increase and materially. And why the headline number was swallowed by ignorant observers who don't have any understanding what was driving the number and therefore why it should recover (other things being equal). H100/H200 inventory write downs totalled 220bps being included in the 9.6%. It is worst case a one time provision, meaning the base line is closer to 11.5% in Q4. Best case scenario they sold the stock at prices above the net book value. I know they are selling meaningful quantities of Hopper systems. We don't know exactly how much or pricing. There are two other factors which I think will impact margin in a positive way, actually 3. Throughput. The more they produce and ship the lower the cost. This is due to what is a considerable fixed overhead being applied over a larger revenue base. This could easily be 150-200bps. I recall management commenting that Malaysia was only at 1% capacity(Q3). It doesn't take a genius to know that Malaysia, being a large facility is staffed by 100s if not 1000's of staff. 1% means they are doing nothing, costing money. Other things being equal, Blackwell is a more profitable architecture than Hopper. It's newer and more scarce. Simple demand/supply in play here. We know Blackwell systems are now the dominant revenue driver. Added, this enables a better product mix to higher margin sales, with less reliance on other systems. ASP is also much higher. R&D costs. SM have spent significant sums on R&D, preparing for Blackwell. I would estimate 40-50M extra costs in Q2/Q3 developing new products. However the revenue was deferred due to constraints. We all read about the lumpy Blackwell start. So, this cost is absorbed directly to COGS(margin). It's also worth mentioning the costs re the late filing/investigations which were about $20M. Assuming 1%(100bps) based on Q3 numbers equates to around 45M. It feasible that net SM could improve margins 300-350bps, i.e report 13.1%+. 14% would be brilliant but im not counting on it. The market expects the same 9.6% or worse! I think they are very much in for a surprise. Just my opinion and I may be wrong. Currently, the scorecard on Super Micro is a 200% realised gain and a 100% unrealised gain (USD, we paid $26.5). It has been a fantastic investment and we have navigated the issues well, much to the clear annoyance of some :).

At least they haven't named one Skynet, yet

every quarter will be better than the last. Micron will double revenue and earnings over the next 4-5 years.

Samsung will commence production of OLED screens in Q4, which will be used in Apple's first foldable phone-scheduled for release in H2, 2026. Expect the iPhone foldable to retail for circa £2K!

Following on from the above it has been confirmed that OpenAi Stargate is the Oracle customer-they have signed a deal for 4.6GW of compute. An enormous amount and the biggest ever contract for data centre HPC. Oracle-cloud revenue today is running at around $11B/annum and this will add $30B starting in 2028. As part of the deal oracle will invest $40 billion of its own money and the rest likely from other Stargate partners. As per Jensen 1GW = $40B revenue to Nvidia and as we can see this is 4.6GW and equates to at least 30,000 racks. My take on this- it confirms the narrative that Nvidia are just getting started. Secondly, first move to Oracle/Openai. What will MSFT/AWS/GOOG/Meta/XAI do to defend their position? Answer-very likely accelerate and expand their plans materially. They have to. Winners will certainly be: MU NVDA SMCI AVGO ORCL

From JP Morgan: AMZN has grown its Advertising Services revenue from ~$13B in 2019 to ~$56B in 2024, implying a +39% CAGR. The success of Amazon’s Advertising Services business highlights key advantages AMZN & retailers have over GOOGL & META. According to WSJ, AMZN has deployed more than one million robots in facilities, which is the most it has ever had and near the count of human workers at the facilities.

@2BToo said in PHE: Asking generally (i.e others on here and not just Nik/Adam); what are people's views on PHE? It is indeed quite a drag on the portfolio at the moment and it forms a fair chunk of what I have. I'm seriously wondering whether to move some things out of PHE into something else (of course this then throws up the question of where to move it to). What are other people's views? Another random internet bloke here so don't look for anything deep and meaningful. However, PHE was my first venture into buy and hold shares / funds when I first started investing with IM. Up until then it had just been general tracker "funds" or very specific shares that I was personally interested in and happy to dabble with. I found it quite exciting and interesting to keep an eye on the various shares. I put my full SIPP pension into it and I think I did quite well with it at the time. PHR was the eye opener for me when I could see that folk who knew what they were doing (ie not me) could more actively spot things that were likely to do well over a specific or variable period of time and if I held on to their coat tails and tried to learn a bit about what and why I could do ok as well. Not too long after PHT began I moved everything out of PHE and the other Global funds and into PHT / IML. Again, I think I've done ok out of that but the rational for it was, after chatting things through, that I was fairly comfortable with the risk/reward/volatility side of things and was ok with a medium/longer term outlook. Clearly I'm now hanging off Adam (and others) coat tails but for now that's not an uncomfortable feeling.

OpenAI plans to add GOOG cloud service to meet its growing needs for computing capacity, marking a surprising collaboration between two prominent competitors in the artificial intelligence sector. The deal, which has been under discussion for a few months, was finalised recently. It underscores how massive computing demands to train and deploy AI models are reshaping the competitive dynamics in AI, and marks OpenAI's latest move to diversify its compute sources beyond its major supporter MSFT.

Colossus-2 expansion to 1 million GPUs gets closer....... xAI is raising $25 billion, comprising $5 billion in debt through Morgan Stanley (a term loan B, fixed-rate term loan, and senior secured notes) to fund the Colossus supercomputer with commitments due by June 17, 2025. Additionally, xAI is seeking $20 billion in equity at a valuation between $120 billion and $200 billion to support its growth.

KLA Corporation (KLAC) Bank of America Global Technology Conference (Transcript) notes. The take away is the company is doing very well and is outperforming its sector. management are very optimistic despite 'china' and tariffs. KLA has delivered a spectacular recover-there is clearly plenty more growth in the tank. Strong Growth at the Leading Edge: KLA reported robust growth in demand for leading-edge technologies, particularly at the 2-nanometre node. The company is well-positioned, with a higher market share at this node compared to the 3-nanometre node, driven by increased investment in advanced semiconductor technologies. Advanced Packaging Revenue Surge(CoWoS-L KLA anticipates significant growth in its advanced packaging segment, projecting USD 850 million in revenue for 2025, up from USD 500 million in 2024. This growth is fuelled by a 70% contribution from process control in advanced packaging, a market expected to grow faster than the core wafer fab equipment (WFE) market, valued at USD 9–10 billion. Robust Service Business Growth: The service business is expected to achieve low double-digit growth, supported by a 75% contract revenue stream and the extended lifespan of KLA’s tools. This resilience persists despite challenges from restrictions in China, ensuring steady revenue growth. What you could call 'money for old rope' Financial Performance and Margins: KLA targets a gross margin of 63% in 2026, with a mid-60s target for 2025. The company maintains a 65% incremental gross margin on revenue growth, reflecting sustainable profitability even amidst tariff challenges. The company seeks margin and won't enter low margin segments. Market Position and Growth Outlook: KLA expects WFE growth to slightly outpace semiconductor revenue growth (projected at 7–8%), with logic foundry WFE and process control growing faster than core WFE. This positions KLA to potentially grow faster than the market, supported by its strong portfolio and unique product capabilities. Investment in Future Technologies: KLA plans to invest in the next node by 2026, aligning with customer needs for advanced technologies, particularly in AI, high-performance computing, and high-bandwidth memory (HBM). This forward-looking strategy supports long-term growth. These highlights reflect KLA’s optimistic outlook, underpinned by strategic focus on high-growth areas like advanced packaging and leading-edge technologies.

Interesting update which is a big positive for companies like Oracle. 'You can have our tech if we manage it' -seems to be a link to Stagate/open AI for countries. Quoted from a news wire below New AI Diffusion Rule is COMING SOON and New Version Will Let Allies Buy US Chips With Conditions The Commerce Department is drafting a replacement for its recently repealed AI diffusion rule to ensure the new controls don’t impede U.S. exports to allies, Commerce Secretary Howard Lutnick said June 4. “Our view is we are going to allow our allies to buy AI chips provided they’re run by an approved American data center operator and the cloud that touches that data center is an approved American operator, so we control it while it’s over there,” Lutnick testified before the Senate Appropriations Subcommittee on Commerce, Justice and Science. The rule that was rescinded last month (see 2505130018) was “very confusing,” Lutnick said. “For example, the prime minister of Poland hunted me down and said, ‘What did I ever do to you that you have me as a Tier 3’ country, the most stringent of three tiers? ‘I’m part of Europe -- what are you doing?’ It was illogical. It was hastily rushed through at the very end of the Biden administration.” He expects Commerce will release the new AI diffusion rule soon. “I can’t say with more specificity but pretty soon,” he said.

A solid result from AVGO, beating expectations and guiding higher-ahead of consensus expectations. Asics is growing dramatically with the growth trend continuing through 2026. Q2 FY2025 Results: Revenue: $15.004 billion, up 20% year-on-year, meeting estimates of $14.99 billion. AI Semiconductor Revenue: $4.4 billion, up 46% year-on-year. Infrastructure Software Revenue: $6.6 billion, up 25% year-on-year, exceeding guidance of $6.5 billion. Semiconductor Solutions Revenue: $8.4 billion, up 17% year-on-year. Adjusted EBITDA: $10.0 billion, up 35% year-on-year (67% of revenue). Free Cash Flow: $6.4 billion, up 44% year-on-year (43% of revenue). Capital Allocation: Paid $2.8 billion in dividends and repurchased $4.2 billion in shares. Q3 FY2025 Guidance: Revenue: $15.8 billion, up 21% year-on-year, slightly above estimates of $15.72–$15.79 billion. AI Semiconductor Revenue: $5.1 billion, up 60% year-on-year. Semiconductor Revenue: $9.1 billion, up 25% year-on-year. Infrastructure Software Revenue: $6.7 billion, up 16% year-on-year. Adjusted EBITDA: Expected at 66% of revenue. Management Insights Hock E. Tan, CEO, highlighted, “Our record Q1 and Q2 revenues of $15.004 billion reflect strong AI demand and VMware momentum.” He noted AI networking (Ethernet-based) contributed 40% of AI revenue and introduced the Tomahawk 6 switch, enabling efficient AI clusters with 102.4 terabits per second capacity. Tan projected “accelerated XPU demand in late 2026 for inference and training.” Kirsten M. Spears, CFO, added, “Gross margins of 79.1% in Q1 and 79.4% in Q2 exceeded forecasts due to a favourable product mix.” Outlook and 2026 Expectations Broadcom anticipates continued growth, with Q3 revenue guidance of $15.8 billion and AI semiconductor revenue expected to sustain its FY2025 growth rate into FY2026. Management expressed confidence in organic growth, supported by innovations like Tomahawk 6 and strong VMware Cloud Foundation adoption (over 85% of top 10,000 customers). Risks and Challenges Non-AI semiconductor revenue remains sluggish, with slow recovery. Free cash flow is impacted by VMware acquisition debt interest and higher taxes. The stock is at an all time high so we would expect a bit of churn as recently macro events play out and the stock forms a solid base to spring board to the next level. A fantastic business that has a very bright future. [image: 1749193083757-screenshot-2025-06-06-at-07.57.39.png]

Yep-medp too. Ron’s list is correct

The previously posted tables containing predicted min Blackwell (packaged) chips has proven very accurate in fact we also said TSMC would likely find additional capacity(and apparently they have). And from that we forecast the revenue growth, knowing what they sell these chips for. The start of Blackwell was clunky due to the transition from Hopper because Hopper was packaged on the 'S' line and Blackwell on the 'L' line and there were some heating issues which is no surprise because it was all very new. We predicted about $10 billion Q o Q growth vs $4-5B during Hoppers reign. We are now at this point today. Blackwell is bug free and at ramping as fast as CoWoS will allow. This is the old schedule by quarter in 000's: [image: 1748798151117-screenshot-2025-06-01-at-18.14.59.png] . TSMC have indicated circa 500k chips per month and growing from June. They are all sold(5-10X). Losing China completely, and it wont be but let's just ignore it all together. All that has happened is we take the hit and next quarter they achieve $47B and the next $57, $67, $77 and so on. The only caveat is that when Rubin arrives at year end, Dec/Jan they will add further revenue to each quarter simply due to the ASP of Rubin being higher-so id expect $12-$13B q o q increases. Next year automotive will be meaningful as all car makers equip their cars with ADAS and robotics/omniverse will start adding revenues-the q o q rhythm will grow again. But this is exactly how I see their revenue grow over time. A very long time and yes I expect 100B+ per quarter some time at the end of next year or Q1 the following. And to anyone who thinks they will have transition issues again, well, Rubin and Rubin Ultra are all packaged on the same line so the transition will be seamless . It is not until 2027 that packaging will move to a new process called Sow-X which is when the real party starts. We are looking at racks 40X more powerful than today's. Racks containing 500 chips and consuming 1 megawatt each and could cost $20M or more. This is the roadmap from 2027 to 29. The experts have been predicting a plateau in revenue for over a year now-remember Cathy Wood and the 'Dean of Valuation'. They were all wrong and continue to be so. Cisco-look at Cisco. A very scientific analogy. Exciting times ahead imo.

The stock doesn’t fit out criteria and moving 100% in a day doesn’t make it attractive. Odds are it will fade over the coming weeks. It’s very small, no track record, loses money and will be extremely volatile. And to add something you have to make a call on what to sell. That’s not to say it can’t go higher.

Morning, Air time is driven by: Weight or our position vs the market position. We were contrarians with SMCI (still are). SMCI drives a lot of opinion! The significance of the company vs the sector Companies driving change/innovation (driving news) My personal interests-and what I think others find interesting-esoteric sectors Cobens has 20k clients and we managed 3X more assets than IM before the rescue I appreciate that we talk about Tech a lot and a couple of holdings in particular. The fact is Nvidia drives/is a barometer of the wider sector(and the market) and what is good/bad for Nvidia impacts other big names.

[image: 1746432733880-screenshot-2025-05-05-at-09.10.05.png]