Nvidia - Chip Wars and Artificial Intelligence

Great investor expectations of artificial intelligence (AI) have driven the share price of Nvidia to breathtaking heights

AI's bright and shiny future may come true, and certainly has been marketed as a once-in-a-life time technological turning point

For now, Nvidia alone owns the market for AI applications on devices with multiples functionalities 

However, integration of specialized NPUs and cloud-based models (already available on Google, Amazon and Microsoft clouds) will prove to be game-changers in a not-so-distant future

Rather than attempting to join the Nvidia bandwagon, especially after the train left the station, this selection suggests a considered view of the semiconductor industry

Nvidia - in the uncertainty surrounding the extent of AI's grip on entire industries - remains a sphinx, inscrutable about what the future truly beholds

Comparisons between financial ratios , on the Analytics tab, may provide some of the answers sought by investors

The ratios draw stark comparisons across the semiconductor firms listed on US markets, by share price to earnings (P/E), to book value (P/B), to cash flow (P/CF) and many others, with striking differences in investor appreciation

• Firms operating in the same segment of 'fabless IC design' as Nvidia master specialized AI programming capacity to accelerate machine learning and artificial intelligence (AI) workloads. Unsurprisingly, integration of multiple AI chips in neural processing units (NPUs) will proceed apace and vendors include
  • Intel  
    Qualcomm  
  • Advanced Micro Devices  
    Huawei (China)
    Samsung (South Korea)
    MediaTek (Taiwan)

•  A selected group of powerful firms enjoys real-life quasi-monopoly positions with much lower valuation ratios than Nvidia - such as foundry TSMC or dominant lithography specialist ASML 

• Nvidia will be challenged by cloud-based AI services, with familiar names. With potent hardware accelerators, their neural units (NPUs) are optimized for tasks related to artificial networks and tensor units (TPU's) are developed by Google to accelerate the training and inference of deep learning models
  • Amazon  
  • Microsoft Azure  
  • Google  
  • Meta  

Vanguard Information Technology ETF  is the benchmark of the selection