tech
The AI trade has left the hyperscalers in the dust. What will it take for that to change?
In his Sunday column for Investing Club subscribers, Jim Cramer examines the market's love affair with memory and semi-cap equipment stocks.
TL;DR
- Hyperscalers are facing stock market struggles due to hardware shortages, particularly in memory chips (HBM).
- Memory chip stocks (SK Hynix, Samsung, Micron) and data storage stocks (Sandisk, Western Digital, Seagate) have seen significant price increases.
- Capital equipment companies (Applied Materials, Lam Research, KLA Corp) are crucial to the supply chain, controlling intellectual property for chip production.
- Meta Platforms is particularly exposed due to its reliance on an advertising model and lack of a web services business.
- Hyperscalers are attempting to mitigate Nvidia's dominance by co-designing custom AI chips with companies like Marvell Technology and Broadcom.
- Despite some strategies, the memory and semi-cap equipment sectors are currently outperforming hyperscalers.
- The profitability of AI businesses remains a key challenge for hyperscalers.
- The author anticipates a market decline possibly influenced by presidential actions, creating opportunities to shift investments.