tech
Nvidia mostly sat out the chip sector's best quarter ever. What needs to change?
The problem cannot be explained by looking at Nvidia's reported results.
TL;DR
- The Philadelphia Semiconductor Index (SOX) has risen over 80% in the second quarter, with many chip stocks seeing substantial gains.
- Nvidia, despite pioneering the AI chip boom with its GPUs, has been the worst performer in the SOX during this period, with only a 12% gain.
- The shift towards agentic AI systems requires more CPU power alongside GPUs, benefiting companies like Intel and Arm Holdings.
- Concerns about competition from major customers like Google, Amazon, and Microsoft, who are developing their own AI chips, are impacting Nvidia's stock.
- Jim Cramer recommends that Nvidia increase stock repurchases, similar to Apple's strategy, to drive shareholder value, especially given its substantial free cash flow.