Investments and Portfolios

Reports are circulating that Huawei’s Ascend AI chips, notably the Ascend 910C, are struggling to gain traction in China’s AI market, with some calling them subpar. The chips are reportedly plagued by overheating issues, which is a big red flag for reliability and has put off major Chinese tech firms, many of whom are Huawei’s rivals and wary of adopting its tech. Huawei’s software, the Compute Architecture for Neural Networks (CANN), is also lagging behind NVIDIA’s CUDA platform. CUDA’s well-established ecosystem and developer-friendly tools create a lock-in effect, making it tough for Huawei to compete, as CANN struggles with compatibility and performance. While U.S. restrictions on NVIDIA’s H20 GPUs have given Huawei a slight edge in China, its global ambitions are hamstrung by sanctions and supply chain woes. Production yields for the 910C, built on SMIC’s 7nm process, are reportedly stuck at around 30%, limiting scalability. Despite Huawei’s claims that the 910C rivals NVIDIA’s H100, these issues—overheating, weaker software, and geopolitical barriers—mean it’s got a steep hill to climb to challenge NVIDIA’s dominance in the AI chip race. Don't count out the new Nvidia B20 (H20 replacement). Imo Nvidia is very much still in the China market. It's also a reminder-CUDA is king, not just the chip. 7nm vs TSMC 2nm/5nm and yields at 90%. Maybe Huawei needs some DLC

President Trump has commented on a personal call with President Xi, framing it a very positive and the two plan to meet soon in China. Markets like it

Yep-medp too. Ron’s list is correct

AVGO is due to report Q2 earnings tomorrow. Here is what is expected. They will almost certainly beat and guide higher. We will be watching for comments around their ASICS segment and VMWare. A fantastic business, acquired at a fair price. We acquired the stock on 18 March @ $193 and today it sits at an all time high of $260. [image: 1749053157390-screenshot-2025-06-04-at-16.59.55.png]

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.

@dingg yep - mine too

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.

If there is a tariff on phones, Apple will raise global prices to smooth the spikes. It’s not a sustainable model so best to ignore it as yet about pet project of DT. With earnings next week(Nvidia) it’s all eyes elsewhere.

Nice. The Godfather of AI is joining Charles Liang which is a big endorsement 5pm GMT tomorrow.[image: 1747560100283-screenshot-2025-05-18-at-10.20.28.png]

Micron is making great progress with its HBM3E memory, a super-fast type of DRAM used in AI and high-performance computing. They’re producing two versions: a 12-layer (12-Hi) version that holds more data (36GB) and an 8-layer (8-Hi) version (24GB). Micron says they’re getting better at making the 12-Hi version faster than the 8-Hi, which means fewer mistakes and more reliable production. Originally, they planned for the 12-Hi to become their main product later in 2025, but now they expect it to take over by the third quarter of 2025 (July-September). This is a big deal because customers, like companies building AI systems, love the 12-Hi for its speed (over 1.2 terabytes per second) and 20% lower power use compared to competitors. Micron’s also doing better than expected this quarter because memory prices are strong and the market for another type of memory, NAND, is stable. Looking ahead to 2026, they’re talking with customers about making even more 12-Hi memory and getting ready for HBM4, the next generation that’s faster and holds more data . This puts Micron in a strong spot to compete with rivals like SK hynix and Samsung.

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.

Medpace I did mention it here and an email will go out, probably next week

Semiconductor stocks are up

Coming from a previous background in IT-related businesses, I'm astonished at the 85% figure - shows what a massive potential market there is, because lots of companies, and lots of providers, are pushing a move away from the (some would say "old") on prem model.

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[image: 1746082603566-screenshot-2025-05-01-at-07.55.57.png] Management Perspective Chief Executive Mark Zuckerberg outlined five key prospects fuelled by AI investments: enhanced advertising, immersive experiences, business messaging, advancements in Meta AI, and AI-powered devices. He highlighted a 5% rise in ad conversions driven by an updated recommendation model for Reels and a 30% surge in advertisers adopting AI creative tools. The company reported significant growth in Threads, now surpassing 350 million monthly active users, and underscored AI’s role in boosting Facebook engagement by 7% and Instagram by 6%. Zuckerberg noted progress with Meta AI, which has nearly one billion active users, with plans to prioritise scaling and deepening user interaction before monetisation. Sales of new AI-enabled Ray-Ban glasses tripled year-on-year. Finance Director Susan Li reported total revenue of $42.3 billion, a 16% year-on-year increase, with operating profit of $17.6 billion and a 41% operating margin. Free cash flow reached $10.3 billion, and the company repurchased $13.4 billion in shares. Outlook Meta projects Q2 2025 revenue of $42.5 billion to $45.5 billion, supported by a 1% currency tailwind. Full-year 2025 expenditure is forecast to range from $113 billion to $118 billion, reduced from previous guidance. Capital expenditure guidance for 2025 has risen to $64 billion to $72 billion, largely due to data centre investments and elevated infrastructure costs. The company expects tax rates for 2025 to be between 12% and 15%. Financial Performance Q1 revenue totalled $42.3 billion, with advertising revenue contributing $41.4 billion, up 16% year-on-year. Strong performance was noted in North America and Rest of World regions. The Family of Apps generated $41.9 billion in revenue, while Reality Labs revenue fell 6% to $412 million due to lower Meta Quest sales. Total operating costs rose by 9%, driven by increased infrastructure and compensation expenses, though general and administrative costs dropped by 34%. The company closed Q1 with $70.2 billion in cash and marketable securities. The average price per advert increased by 10%, with advert impressions growing by 5%. Q&A Session Brian Nowak, Morgan Stanley: Enquired about progress with AI models like Llama 4 and Meta AI usage trends. Zuckerberg explained that Llama 4 is optimised for low latency and tailored interactions. Eric Sheridan, Goldman Sachs: Asked about the standalone Meta AI app. Zuckerberg emphasised its role in securing U.S. leadership and standing out through personalisation. Justin Post, Bank of America: Questioned Q2 guidance amid e-commerce trends and rising CapEx. Li confirmed the guidance reflects solid revenue trends and highlighted increased infrastructure investments. Analysts raised concerns about CapEx intensity and recruitment. Management reaffirmed its focus on AI infrastructure and technical talent to support strategic priorities. Sentiment Analysis Analysts voiced concerns about high CapEx and the timeline for AI monetisation but recognised strong engagement and revenue growth. Management expressed confidence in AI-driven growth opportunities, with Zuckerberg highlighting AI’s transformative potential and stressing efficient investments. Compared to the prior quarter, discussions maintained a consistent focus on AI and infrastructure, with an optimistic outlook for long-term growth. Quarter-on-Quarter Comparison Revenue guidance for Q2 2025 rose from Q1’s $39.5 billion–$41.8 billion range. Expenditure guidance was lowered compared to the previous quarter, reflecting refined projections. CapEx outlook for 2025 increased from $60 billion–$65 billion due to accelerated data centre investments. Continued emphasis on AI advancements, with Threads and Meta AI showing notable user growth compared to the prior quarter. Final Takeaway Meta Platforms delivered a robust Q1 2025 with $42.3 billion in revenue and strong growth across its AI-driven initiatives. The company increased its CapEx outlook to support AI and data infrastructure while reducing full-year expenditure guidance. With confident projections for Q2 2025 revenue and growing user engagement in apps like Threads and Meta AI, Meta is positioning itself for sustained growth despite regulatory challenges.

[image: 1746082140962-screenshot-2025-05-01-at-07.41.22.png] Management Perspective Chief Executive Rick Wallace announced that Q3 2025 revenue reached $3.06 billion, exceeding the forecast midpoint. He highlighted strong demand for cutting-edge logic and high-bandwidth memory (HBM), with growing contributions from advanced packaging, fuelled by AI infrastructure investments. Wallace noted that KLA’s advanced packaging revenue rose to over $500 million in 2024 and is projected to surpass $850 million in 2025, supported by market diversification and product innovation. He emphasised KLA’s continued leadership in global market share for wafer fabrication equipment (WFE) and process control in 2024, with its process control share increasing by approximately 250 basis points over five years. Finance Director Bren Higgins reported a non-GAAP earnings per share (EPS) of $8.41, at the upper end of guidance, with a gross margin of 63%. Operating costs totalled $575 million, below the expected midpoint due to lower expenditure on prototype materials. Free cash flow for the quarter was $990 million, with total capital returns amounting to $733 million. Higgins announced a 12% dividend increase to $1.90 per share quarterly and a new $5 billion share buyback programme, expressing confidence in KLA’s growth trajectory. Outlook KLA provided Q2 2025 revenue guidance of $3.075 billion, with non-GAAP EPS expected at $8.53, plus or minus $0.78. The gross margin is forecast to remain at 63%, despite a 100 basis point headwind from global tariffs. The company reaffirmed its WFE growth outlook for 2025, projecting mid-single-digit growth, with KLA aiming to outperform the market through increased process control intensity and market share gains. Leadership anticipates continued growth in advanced packaging revenue, driven by broader AI-led semiconductor advancements, with potential increases in process control intensity in DRAM and logic segments. Financial Performance For Q3 2025, KLA recorded revenue of $3.06 billion and non-GAAP diluted EPS of $8.41. The gross margin of 63% benefited from a favourable product mix. Advanced packaging played a significant role, with revenue projected to grow from $500 million in 2024 to over $850 million in 2025. Service revenue reached $669 million in the quarter, marking the 52nd consecutive quarter of year-on-year growth, despite challenges from U.S. export controls. Free cash flow over the trailing twelve months was $3.5 billion, with a 30% free cash flow margin, placing KLA among the top 10% of S&P 500 companies. Q&A Session Harlan Sur, JPMorgan: Raised concerns about tariff impacts and the postponement of Investor Day. Finance Director Higgins explained the delay was due to global trade uncertainties and outlined strategies to mitigate tariff-related cost pressures. Atif Malik, Citi: Enquired about service growth and advanced packaging positioning. Higgins projected approximately 10% service growth for 2025 and underscored KLA’s strong position in logic and HBM for advanced packaging. Vivek Arya, Bank of America Securities: Asked about 2026 WFE prospects. CEO Wallace expressed optimism about sustained AI-driven investments and demand for leading-edge technology, anticipating steady growth through 2030. Sentiment Analysis Analysts expressed concerns over global trade uncertainties and tariff impacts, adopting a slightly cautious tone. Management remained confident, citing robust demand in AI, advanced packaging, and market share gains. In prepared remarks, leadership highlighted “strong opportunities” and “consistent performance” but adopted a more measured tone when addressing tariff pressures during the Q&A. Compared to the previous quarter, management’s tone remained steady, while analysts focused more on macroeconomic uncertainties and competitive dynamics. Quarter-on-Quarter Comparison Advanced packaging revenue guidance showed significant growth, rising from $750 million projected in Q2 to over $850 million in Q3 for 2025. Continued emphasis on AI infrastructure as a key driver of leading-edge investments, consistent with prior quarter commentary. Gross margin guidance for 2025 edged up slightly despite new tariff-related challenges, reflecting confidence in product mix improvements and operational efficiency. Analysts maintained their focus on tariff impacts and China-related risks, echoing concerns from the previous quarter. Final Takeaway KLA Corporation delivered robust Q3 2025 results, driven by strong demand in cutting-edge logic, HBM, and advanced packaging, fuelled by AI infrastructure investments. The company raised its advanced packaging revenue target to over $850 million for 2025 and announced a substantial share buyback programme and dividend increase. Despite challenges from global trade uncertainties and tariff impacts, KLA remains optimistic about its leadership in process control and growth prospects, underpinned by its diversified portfolio and market share gains.

Alphabet GAAP EPS of $2.81 beats by $0.80, revenue of $90.23B beats by $1.08B Alphabet Inc., Google’s parent company, delivered a stellar Q1 2025 earnings report, showcasing robust financial performance. Revenue reached $90.23 billion, up 12% from $80.54 billion in Q1 2024, exceeding analyst expectations of $89.1 billion. Diluted earnings per share soared 49% to $2.81, surpassing forecasts of $2.01, driven by an $8b unrealised gain on non-marketable securities (stocks/investments). Operating income climbed 20% to $30.61 billion, with the operating margin expanding to 33.9% from 31.6%, reflecting disciplined cost management despite a 14% rise in R&D spending to $13.56 billion. Google Cloud was a standout, with revenue up 28% to $12.26 billion and operating margin nearly doubling to 17.8% from 9.4%. Alphabet announced a $70 billion share buyback programme and a $0.21 per share dividend, reinforcing shareholder returns. Capital expenditure was confirmed at $75 billion for 2025, a 43% increase from $52.5 billion in 2024, primarily for AI-driven infrastructure like servers and data centres, with $16–18 billion earmarked for Q1 alone. CEO Sundar Pichai attributed the strong results to Alphabet’s “unique full stack approach to AI,” highlighting breakthroughs with Gemini 2.5 and AI Overviews, which now serves 1.5 billion monthly users. CFO Anat Ashkenazi emphasised sustained investment in technical infrastructure to bolster cloud and AI capabilities, noting that costs grew slower than revenue, enhancing efficiency [image: 1745564682098-screenshot-2025-04-25-at-07.51.54.png] [image: 1745564695087-screenshot-2025-04-25-at-07.52.11.png]