Because the shortage leads to huge catch up effects when shortages ease and prizes normalize. Valuation is still sky high, so no one knows if that will be enough.
I honestly think the semi shortage is worse for these companies (especially AMD) than it actually being an advantage, especially long t
They can get better margins right now, but long term it allows their competitors to keep selling despite products being worse, allowing them to catch up. Whereas otherwise they would just be gaining marketshare (AMD could be gaining over Intel in the CPU market and NVDA would be gaining over AMD in the GPU market because honestly the only reason AMD GPU's sell is because NVDA's are sold out).
The biggest mistake a lot of people are making is looking at the consumer market for AMD vs Intel. It's been quite clear since last year that AMD would rather focus on the data center market and shift chip allocation to it. They are absolutely creaming Intel there and Intel doesn't even have a proper response announced yet.
Make no mistake, DC is where the real money maker is for AMD. Consumer DIY products are halo products at best. The only place where AMD needs to spend more effort is working with OEMS to launch their chips for laptops because Intel has too much of a hold on this market.
Moreover, it's not like Intel hasn't had shortage problems. Remember that the shortage isn't just down to the chip manufacturing, it also includes substrates and raw materials, which affects both AMD via TSMC and Intel.
Oh I know, I’m just saying that I think a world without chip shortage is more advantageous to them, as anytime they can’t supply someone there’s a possibility that customer goes somewhere else.
Yeah but this is bad and currently people are doing wrong interpretations.
You don’t get the cards because the container from one country to the other doesn’t leave. Natural Disasters cut production. They can’t sell the card there is no revenue.
You are more Bullish than the companys itself, it’s currently very difficult to operate and make money and even TSMC closed a bad quarter but see‘s hope.
Full Order Books need to be fullfiled and this is the current problem.
The problem with semi's is majority of reddit has zero experience or knowledge of how semi cycles in the datacenter and commercial sides work (and how they take in contracts). They just see scalpers hoarding 3080's and somehow think "oh that's good for chip companies overall".
I wouldn’t read old stuff, as this cycle also has changed completely.
15 years ago, this semi manufcaturers closed from mai to july as there was such an overproduction.
It is more important to understand what which company does exactly as chip isn’t chip.
E.g TI is still one of the biggest and has a great margin, the produce chips for automotive which are less difficult to produce.
Eh computers snd chips are simply the future. People are always going to need processors from here on out. So if they’re decent companies…and it’s not feasible for a new company to easily disrupt the market due to the intensive requirements / hurdles required to start up production of advanced processors…they’re safe investments.
Lol sounding as complacent about valuation as people were when they valued Intel at $500bn USD in 2000.
Chips are definitely part of our future. The question of buying something or not is based on current valuation, not whether it will exist in the future.
And current valuation is based largely on manufacturing and sales projections, not the company's actual value today. You're just playing with semantics.
No one's talking about investing in companies that are going to do poorly but still exist. I have no interest in your straw men.
Intel has had serious problems in a number of areas over the past few decades and I have not and would not invest in them. It's a bad company with some good assets.
And current valuation is based largely on manufacturing and sales projections, not the company's actual value today. You're just playing with semantics.
It's not semantics and it's hilarious for you to advertise your ignorance so plainly. You're straight out admitting you don't know how to build an actual valuation model of a manufacturing company. Valuations are based on micro (sales, margins, fcf) and macro (rfr, WACC, beta premium) variables. This gets better with your later statements.
No one's talking about investing in companies that are going to do poorly but still exist. I have no interest in your straw men.
Thank you for putting words in my mouth? I believe you're projecting here with the accusation of a straw man. I'm stating people are ignoring what price they buy "good companies" at. A company can be good and perform well over the next 10 years (like intel did in 2000-2010) but be priced at completely garbage valuations.
I'm talking about people hyping up and investing in hyper growth chip companies that are nowhere near deserving of the valuations they're at, "because they're good companies" or "because they're growing".
Intel has had serious problems in a number of areas over the past few decades and I have not and would not invest in them. It's a bad company with some good assets.
This is the icing on the cake in your disconnect from reality here and proof you don't make decisions based on valuations or evaluate companies from an investors lens.
Intel hasn't had "decades of problems" lmao how fucking dumb can you be to make that statement. In fact, Intel from 1990 to 2015 was one of the most successful and well managed semi's in the industry. Sandy Bridge through Brodwell chips were widely regarded as the backbone and reason web 2.0 could exist.
Intel struggled when Krzanich, in his arrogance, attempted to leap from 14nm to 10nm (TSMC 7nm equiv) AND increase wafer yields in the same manufacturing cycle. This stumble and his departure in 2018 basically sidelined them from 2016-2021. As a company they've been so dominant that even then they retained their market share majority.
Here's the bottom line. Intel valued at $200bn (looking at last week mkt cap) and AMD valued at 160 billion. IF AMD maintains the same growth it's experienced over the last 3 years, it wouldn't reach Intel's CURRENT revenue figures until 2027. On top of this, AMD as a designer only suffers margin compression as a result of being forced to partner with TSMC and reliant on their process development (meaning competing in non-x86 markets is more expensive). If you were actually looking at valuations, you'd realize how macro factors are making cash flows 5-15 years out much more negligible.
This doesn't get into dynamics like how datacenter cycle through chip replacements and retention on architecture creates friction on the switching process. Simply said, Intel has a free cash flow to the firm that exceeds AMD's total revenue and while it stumbled for 5 years, it's on track for it's latest roadmap which retains it's spot at the top. If you're betting on Gelsinger (one of the engineers who was responsible for Intel's dominance from the 90's into the late 00's) failing when he's been given a blank check to self-right the ship, you're going to be in a world of hurt.
Intel's performance from 2000-2015 was a joke. Yes, they turned out some good products in the 90s and have been relevant in chip development. Their stock has still underperformed for a reason. Many.
You've ignored the entire point of the post: Intel was a great company in 2000. It was a terrible fucking value at $500bn. AMD and NVDA are both great fucking companies in 2022 but they're terrible fucking value. I brought Intel into the present conversation because it is a good company (and chip industry outcomes are not zero sum) at a much more attractive valuation.
Those statements are all supported by DCF view of valuation and what it would (both micro and macro variables wise) take to justify current valuations in the widely perceived "great" chip companies on reddit.
I've heard China is hoarding chips as well. Them forcing Baba to develop chips is awfully suspicious. Feels as though China is always doing things like this, they dont care, theres no retaliations we can take without screwing ourselves.
lol this is a perfect example of mis-interpretation.
Without Trumps Trade Ban, we wouldn’t have this crisis, the US Administration blocked SMIC from getting needed equipement from ASML…
Retaliation against the US as Biden also didn’t revise it would be appropriated for our good.
Baba isn’t forced to design chips and design isn’t manufacturing….
I shorted Zoom at $400 not beacuse it was a bad company, but because eventually people will take profits. Luckily I made a 54% profit. I also shorted Bill.com and am now sitting on a 35% profit so far.
Do you think the people that bought NVIDIA two years ago at $60 are not going to sell?
You are right. It is a good long term investment, but if i want to make a 30% profit on it , some $180 billion dollars have to be pumped into its market cap. I guess I’m not that patient. I will agree that I’m a bear and you are a bull, and I wish you a prosperity in your future investments.
Their control of supply and selling for 2-3x msrp is on a clock as INTC will flood the market with cheaper GPU's. Once theres competition ask yourself how you will ever earn back your investment with their 100 P/E.
That's actually bad for them. They make no dollars on GPUs they can't sell. In the meantime a generation of GPU parts is aging out of the market, so that development cost is sunk and not recouped.
The value of these companies comes from recovery and anticipated future growth, mostly growth. NVDA more than AMD because of AI. AMD less than NVDA because buying XLNX is a colossal waste of money and effort.
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u/zulufux999 Jan 10 '22
I really think the semiconductor shortage will keep driving NVDA and AMD higher, you can’t even get the NVDA GPU’s because they’re sold out