SOX index is correcting! Check the potential for the supplier stocks of Nvidia to invest in now!

ビットバレー投資家 wrote a column · May 30, 2024 14:52

$NVIDIA (NVDA.US)$ The market capitalization exceeded $3 trillion for the first time on June 5, surpassing Apple and rising to second place in the world. The $3 trillion market capitalization is the first for a semiconductor company. In response to the king's impressive performance, semiconductor stocks in the US stock market showed a celebratory uptrend. Among the constituent stocks of the Philadelphia Semiconductor Index (SOX Index), there were also 10 stocks that surpassed Nvidia in terms of growth rate.The stock price is in the $1,100 range.These positive developments pushed the stock price higher.Strong demand for good earnings and AI semiconductors is supporting the stock price. On the other hand, it is composed of Nvidia and its suppliers.Supporting the high stock price, including Nvidia and its suppliers.The SOX Index (Philadelphia Semiconductor Stock Index) isOn the day after reaching an all-time high on May 28th,declinedrisk aversion due to the rise in long-term US interest rates was the background.

On the other hand,FundamentalsLooking at the index ETFs,Overall, the performance outlook for semiconductor stocks led by nvidia is generally positive.During nvidia's earnings call on May 22nd, CEO Jensen Huang indicated that demand for the latest AI semiconductors is expected to exceed supply through 2025. Not only nvidia, but also major suppliers are expected to benefit from the performance side.

This time,Confirming suppliers with relatively high revenue ratios for Nvidia and solid performance outlook.I tried. It could be said that these are stocks that you'd want to invest in during the adjustment of the SOX index.

Nvidia's major suppliers
Based on Bloomberg's supplier list (*), when I checked Nvidia's major suppliers, it looked as follows.

(*) Compiled by Bloomberg based on each company's documents, some data includes estimates. Since the reference dates of each company's documents do not necessarily match, the major supplier list should be seen as reference data. However, as it is based on relatively recent disclosure information, it could be considered close to the current situation.

SOX index is correcting! Check the potential for the supplier stocks of Nvidia to invest in now!

Nvidia's major suppliersIncludes the world's largest foundry $Taiwan Semiconductor (TSM.US)$Wistron, a manufacturer of AI baseboards and GPU platforms, as well as SK Hynix and Samsung Electronics, the world's leading and second-largest companies in AI semiconductor memory, are among the many companies in Taiwan and South Korea.

In the United States, there are subcontract manufacturing companies specializing in the optical communications industry. $Fabrinet (FN.US)$and handling ODM (design and manufacturing of products under other brands) for various industries. $Flex Ltd (FLEX.US)$providing semiconductor packaging and testing services, $Amkor Technology (AMKR.US)$ and being the world's third-largest in the AI semiconductor memory market, $Micron Technology (MU.US)$ among others.

The stock performance of major suppliers varies, with those with high revenue ratios to NVIDIA performing well.
Given the expected benefits from NVIDIA's business expansion for major suppliers of NVIDIA, their stock prices are likely to be robust. However, the actualStock price performance varies.For example, while TSMC has risen by 50% since the beginning of the year, Intel has dropped by 40% during the same period.

Although Intel is a supplier to Nvidia, its revenue ratio to Nvidia is only around 0% to 1%. Intel's performance is heavily influenced by the revenue from its main business of semiconductor sales for PCs rather than being affected by Nvidia's revenue. On the other hand,In the case of TSMC, revenue from Nvidia accounts for 10% of the total,andbenefits from the strong demand for Nvidia's AI semiconductors are much greater.。

There is much more room for growth and outlook for performance in supplier stocks that can expect benefits from Nvidia.
以下では、A stock (listed on the US market) with a relatively high revenue ratio for nvidia.Regarding, I checked the performance outlook and the potential for stock price increase (deviation rate from target stock price).In addition,Currently, the revenue ratio for nvidia is not high, but they are strengthening cooperation with nvidia at present, making it a stock that is likely to benefit greatly in the future.I also added stocks like Micron and Dell to this. For example.

● Micronは、今年2月にエヌビディアのAI半導体に使用されるHBM（広帯域メモリー）の量産を開始した。また今回の決算発表では、AIソフトウェアをめぐる需要の堅調さを反映し、市場予想を上回る業績予想を示した。
●デルは、5月20日に「Dell Technologies World」のイベントでエヌビディアとの協業強化を発表した（※）。

（※詳細は5月21日付の「Nvidia's earnings are coming soon! What you need to know before the earnings announcement, and the latest trends in the 'AI Festival'.Please refer to "

政府機関や企業向けに強みを持つデルは、AIの導入（エヌビディア製AI半導体搭載の製品の導入）が政府機関と企業へ広がる中、その恩恵が期待できよう。また、AI PCの普及による業績拡大も見込まれている。 $Microsoft (MSFT.US)$Dell, which has a partnership with Tomo, announced five products of 'Copilot+ AI PC' on May 20th.

Based on the table above,Considering the deviation from the target stock price and the financial estimates for the next two fiscal years,Providing semiconductor encapsulation and testing services, $Amkor Technology (AMKR.US)$ Or the world's largest foundry, $Taiwan Semiconductor (TSM.US)$and the memory giant, $Micron Technology (MU.US)$ seem to be attractive investment opportunities.

Comprehensive IT companies $Dell Technologies (DELL.US)$The stock price has already exceeded the target stock price. $NVIDIA (NVDA.US)$ Considering the expansion of government agencies and corporate adoption of the product, as well as the expected benefits from the proliferation of AI PCs, analysts may raise their target stock prices in the future. Dell is also considered a strong candidate for buying on dips.

Market Analyst Amelia, created on May 30, 24
Source: Created by moomoo Securities from Bloomberg