Busy couple of weeks on results front
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I don't pay much attention to what Starmer says, they already cost me this years pay rise, so much for not hitting the working man in the pocket!
Most politicians are clueless when it comes to technology anyway.
@Ronski said in Busy couple of weeks on results front:
I don't pay much attention to what Starmer says, they already cost me this years pay rise, so much for not hitting the working man in the pocket!
Most politicians are clueless when it comes to technology anyway.
Ronski, you're wrong. ALL politicians are clueless when it comes to tech, not just most. KS's pitch was a classic "let's talk about something that is exciting and edgy, to make us sound like we are on-board with all this exciting and edgy stuff". Just a variation of "look at the shiny-shiny".
Thanks for your post Adam. Almost all of it went over my head, but it all sounds positive so what could possibly go wrong!
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Stock futures are up materially as the market turns its attention away from interest rate cuts and onto the perceived positives from reports suggesting Trump will take a more restrained approach to imposing tariffs. It now looks like tariffs will be racheted up over time, allowing a period of negotiation.
The nasdaq is +200 in the futures market suggesting investors feel positive about the news.
The Labour market figures for Dec will be published shortly also.
In our opinion the final Biden Chip restrictions document-a 200 page amendment, which has 120 days to come into effect, will be repealed by Trump.
Bond yields- we don't see this as a big issue on the basis yields are rising because of strength in the economy(US), a somewhat different scenario in the UK where yields are rising because of debt demand. Interestingly you would normally see GBP strengthen under this scenario. However, it is actually weakening because investors are shying away from UK assets. Simple FX flow in play. Foreign investors are selling UK assets(in GBP) which is weakening the currency.
'Ask yourself, would you rather have growth+moderate interest rates, or no growth and very low rates'. Rates were higher previously and that didn't hurt wider spending. With rates even lower now(but not low enough for some) growth continues.
PM Starmers AI comments make little sense. UK PLC will invest £15B? By 2030 to 20X the speed of their computers? These are quotes from his news conference. Xai stood up their latest DC in 130 days. Nvidia powered computers have gained 1000X speed gains in 8 years so 20x in 5 doesn't make a lot of sense to me. But apparently the UK will lead the world in AI. Unless the govt adda zero to that 15B it won't get out of the blocks.
@Adam-Kay said in Busy couple of weeks on results front:
In our opinion the final Biden Chip restrictions document-a 200 page amendment, which has 120 days to come into effect, will be repealed by Trump.
Forgive the selective quoting but this is interesting. Presumably this refers to the restrictions that the USGovt has placed on selling more powerful AI chips to China? If so then my guess would be that Biden would be less inclined to restrict the sale of such chips and Trump more inclined to do so. Hence why would Trump repeal any restrictions placed by Biden?
Or have I misunderstood something?
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Hi O,
It is more about codifying who they can sell chips to without approval. A new three tiered system. China, Russia and a few ME countries have historically been restricted above a certain transistor count(power). They've now made up 3 lists and said:
11 countries can buy whatever they want and any quantity they choose
second list can buy whatever they want but only X$ without getting approval
third list can only buy up the previously prescribed power (node/transistor count).The bottom line is, China will get the chips it wants whether that be physical silicon or via the cloud. What Nvidia and others are saying is, this new law won't help the US and it will only force some countries to seek alternatives like China. It's highly political and the timing is no coincidence. Trump will likely repeal it because he will want to put his mark on the sector and it's bad policy. If left unchecked this new policy will only cede some of the technological lead to other countries. It's as simple as that. is it a concern? Not really, because demand exceeds supply and will remain same for at least a couple of years.
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KLA Corporation has been on the move recently, +22% YTD due to accelerated CoWoS packaging capacity build out at TSM, who have moved plans to build the largest packaging facility in the world and install 2,000 machines. Plus the further shrinking of logic and DRAM to the N2 node means increased need for KLA's process control, metrology and inspection solutions.
As we have discussed previously, the market doesn't fully understand the drivers of KLA revenue. Their services revenue is driven by an installed based of 50k machines and customers pay a reoccurring fee for ongoing support. KLA has a 96% renewal rate making this segment very sticky. Further > 50% of said machines are over 18 years old so clearly any China sanctions are not directed at this level of technology.
TSM has signalled 'significant capex' in the area of advanced packaging, an area which KLA dominates.
The company is also repositioning itself towards silicon carbide and gallium nitride management systems where the costs involved are very high and there is a drive for zero defects.
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KLA Corporation has been on the move recently, +22% YTD due to accelerated CoWoS packaging capacity build out at TSM, who have moved plans to build the largest packaging facility in the world and install 2,000 machines. Plus the further shrinking of logic and DRAM to the N2 node means increased need for KLA's process control, metrology and inspection solutions.
As we have discussed previously, the market doesn't fully understand the drivers of KLA revenue. Their services revenue is driven by an installed based of 50k machines and customers pay a reoccurring fee for ongoing support. KLA has a 96% renewal rate making this segment very sticky. Further > 50% of said machines are over 18 years old so clearly any China sanctions are not directed at this level of technology.
TSM has signalled 'significant capex' in the area of advanced packaging, an area which KLA dominates.
The company is also repositioning itself towards silicon carbide and gallium nitride management systems where the costs involved are very high and there is a drive for zero defects.
@Adam-Kay said in Busy couple of weeks on results front:
KLA Corporation has been on the move recently, +22% YTD
Apologies for the muppety question: is that +22% in the last 16 days or the last 365 days?
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Thanks.
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A quick update on the AI Chip restrictions.
The limits on the export of advanced AI chips were established through an interim final rule, they will not take effect for one year and carry a 120-day comment period. This time allows the Trump administration to modify the regulations if it sees fit. If Trump’s officials make no changes, the rules will come into force in January 2026 as written.
Note: Nothing in the amendments addresses any countries access to cloud-native AI such as that offered by many companies around the globe.
Have a good wend, all
Adam
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Yes,solid day and solid start to the year.
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Hi Wibble and thank you. It is very much a Team effort. The market is very unpredictable over 'weeks', any short period in fact, whereas over the longer term prices reflect business fundamentals. You only need to look at KLA Corporation which I have mentioned recently. The stock price softened due to investors sentiment around China, however were wrong about the magnitude of the impact. And more recently it appears they will actually grow earnings over the coming years due to their expertise in the sub 3nm node. Something if you look back, we have been saying for the last 2 years.
Long term, good businesses will reward patient investors via earnings and cashflow growth coupled with compounding (increased dividends and reinvested profits).
We will be making a couple of changes in the coming weeks, once the IC has met to discuss them further.
It is always nice to see new highs but as always past performance is no indication of future returns.
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A quick update on the AI Chip restrictions.
The limits on the export of advanced AI chips were established through an interim final rule, they will not take effect for one year and carry a 120-day comment period. This time allows the Trump administration to modify the regulations if it sees fit. If Trump’s officials make no changes, the rules will come into force in January 2026 as written.
Note: Nothing in the amendments addresses any countries access to cloud-native AI such as that offered by many companies around the globe.
Have a good wend, all
Adam
@Adam-Kay said in Busy couple of weeks on results front:
Nothing in the amendments addresses any countries access to cloud-native AI such as that offered by many companies around the globe.
I had this very thought a few weeks back, the hardware doesn't have to be in China to be used by the Chinese, so the restrictions seem fairly easily circumvented.
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Absolutely correct Ron, as it relates to rogue states(use)This is why it's impossible to police.
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Hi
US markets will be closed today due to it being Martin Luther King Jr Day. FX markets are open and valuations tomorrow will reflect those movements where applicable.
Regards
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Most of the ones I have on a watchlist are climbing today, not Apple but all the rest.
I reckon 9/10 chance that Trump will be good for our investments. But the 1/10 option may involve actual apocalypse rather than just some numbers dropping on a spreadsheet
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I take a view that Govt policy or governing style have a short term effect as investors speculate on the impact. Long term it's business fundamentals. The US want to increase wealth and are pro business.
Trump policy:
deregulation and tax cuts. America first.
Drill Drill DrillUK policy:
High taxes
strong labour laws
being a good global citizen(ethics). At any cost
equality
