Nvidia investors worried last week that demand for AI hardware might fall. Now they also worry some of that could be poached, @DaveLeeBBG says (via @opinion) https://t.co/ecsIZvc2F7 ...

Goertek (002241 CH) Equity Research Summary Company Overview - **Company**: Goertek - **Industry**: Electronic Equipment & Instruments - **Market Cap**: CNY 122.69 billion (USD 17.25 billion) [8][18] Key Points Upgrade and Target Price - Goertek's rating has been upgraded from Reduce to Buy, with a new target price set at RMB 43.80, up from RMB 17.40, indicating a potential upside of approximately 25% from the current share price of RMB 35.14 [3][6][43]. Growth Drivers 1. **AI Glasses Market**: - The global AI glasses market is projected to grow significantly, reaching 5.5 million units by 2025, a 260% year-over-year increase, driven by new product launches from Meta and Xiaomi [3][22]. - Goertek is positioned as a key ODM for major brands, contributing to its growth in the smart hardware sector [22]. 2. **AirPods Market Share Recovery**: - Goertek is expected to recover its market share in AirPods production to 30% by 2025, up from below 30% in 2023-24, due to stronger-than-expected sales of AirPods Pro 3 and renewed partnerships with Apple [4][36]. 3. **New Business Opportunities**: - Goertek is exploring potential collaborations with OpenAI, which is entering the hardware market, potentially supplying components for smart speakers and other devices [5][25]. Financial Projections - **Revenue Growth**: - Revenue is expected to grow from CNY 100.95 billion in 2024 to CNY 135.17 billion by 2027, reflecting a compound annual growth rate (CAGR) of approximately 30% [9][15]. - Net profit is projected to increase from CNY 2.67 billion in 2024 to CNY 5.49 billion by 2027, with a significant increase in earnings per share (EPS) from RMB 0.78 to RMB 1.58 over the same period [9][15]. Innovations and Acquisitions - Goertek showcased multiple optical waveguide solutions at the China International Optoelectronic Exposition (CIOE) 2025, enhancing its capabilities in AR/VR devices [23]. - The planned acquisition of Shanghai OminiLight aims to strengthen Goertek's position in micro-nano optical devices, crucial for AR and AI systems [24]. Market Position and Competitiveness - Goertek has established itself as a leading player in the AR/VR ODM market, with a market share of approximately 70% in global AI glasses ODM assembly [36]. - The company is also focusing on improving its gross profit margins through a better product mix, particularly with higher-margin AI glasses [38]. Risks and Challenges - Potential risks include uncertainty in AirPod orders, slower-than-expected growth in the AR/VR industry, and challenges in maintaining gross profit margins [49]. Conclusion - Goertek is positioned for significant growth driven by advancements in AI glasses, recovery in AirPods market share, and potential collaborations with emerging tech companies like OpenAI. The upgrade to Buy reflects confidence in the company's strategic direction and financial performance over the next few years [3][43].

Core Insights - Samsung Electronics has received approval from Nvidia for its latest high-bandwidth memory (HBM3E) product, marking a significant advancement in the AI hardware chip supply race [1][2][3] Group 1: Product Development and Approval - Samsung's fifth-generation 12-layer HBM3E product has successfully passed Nvidia's qualification tests after a year and a half of development and multiple attempts to meet Nvidia's performance standards [2][3] - The approval signifies a recovery of Samsung's technological credibility in the competitive semiconductor sector, with HBM3E chips intended for use in Nvidia's flagship B300 AI accelerator and AMD's MI350 [3][4] Group 2: Market Dynamics and Competition - Despite the approval, Samsung's supply of HBM3E chips to Nvidia is expected to remain limited, as it is the third company to gain clearance after SK Hynix and Micron Technology [5] - The industry is shifting focus to HBM4, which is set to launch with Nvidia's next-generation Vera Rubin chips next year, with Nvidia urging suppliers to increase speeds beyond the current 8 Gbps standard [5] Group 3: Strategic Partnerships - Nvidia's validation of Samsung's HBM3E chips coincides with the company's efforts to expand its customer base and partnerships, particularly following a recent chip ban in China [6] - A potential semiconductor partnership between Nvidia and Intel could benefit both companies, with Nvidia likely emerging as the primary beneficiary [7]

Revenue Generation - Tether 通过生息国债产生收入 [1] - 行业关注降息对 Tether 收入的影响 [1] Investment Opportunities - 行业探讨投资于由 AI 硬件和计算贷款支持的稳定币的可能性 [1] - AI 被认为是当今最具颠覆性的技术 [1]

Revenue Generation - Tether 通过生息国债产生收入 [1] - 行业关注降息对 Tether 收入的影响 [1] Investment Opportunity - 行业探讨投资于由 AI 硬件和计算贷款支持的稳定币的可能性 [1] - AI 被认为是当今最具颠覆性的技术 [1]

Strategic Alliance - Hon Hai Precision (富士康) 与 Teco Electric 建立战略联盟 [1] - 该联盟旨在帮助富士康推进其在人工智能硬件领域的业务 [1] Industry Focus - 富士康正积极拓展人工智能硬件领域 [1]

Product & Sales - Hugging Face's Reachy Mini, despite limited out-of-the-box functionality, achieved impressive day-one sales [1] Industry Trends - The discussion includes open-source bots and LangChain's $1 billion pivot [1] Company Focus - The report mentions Rivian's new side hustle [1] Social Media Platform - The report references another unusual week for X (formerly Twitter) [1]

Company Performance - Nvidia's revenue has seen a historic ramp, growing from approximately $7 billion per quarter two years ago to $44 billion in just eight quarters [2][3] - The company is generating significant free cash flow and earnings [3] Market Position and Strategy - Nvidia holds a dominant market position in the new AI hardware computing paradigm, similar to leaders in previous computing shifts like PCs, internet, mobile, and cloud [4] - Jensen Wong possesses a unique combination of business acumen and technical expertise, enabling Nvidia to anticipate and position itself ahead of major technology shifts [6] - Nvidia consistently positions itself with the right technology at the right time, exemplified by the transformer engine inside the Hopper GPU released before ChatGPT [7] - Nvidia's Blackwell GPU offers 50 times the inference performance of the previous Hopper GPU, coinciding with a surge in AI computing demand [8] AI Technology and Trends - Reasoning models represent a major advancement in AI, taking minutes to research and provide higher quality answers [8][10][11] - Open AI's weekly active users increased from 300 million to 500 million in just a few months, driven by reasoning models [10] - Anthropic's annual revenue run rate has quadrupled in the last three months, indicating rapid growth in the AI sector [10]

Core Viewpoint - Nvidia is set to report its first-quarter earnings with expectations of $0.88 in earnings and $43.21 billion in revenue, but potential supply chain issues may impact results [1][2]. Financial Expectations - Wall Street anticipates earnings of 88 cents and revenue of $43.21 billion for the quarter [1]. - The guidance for the July quarter may be reduced by approximately 10% due to supply chain challenges related to the H20 chip [5]. Technical Analysis - Nvidia stock is currently trading at $135.50, above its eight-day, 20-day, and 50-day simple moving averages of $134.03, $125.44, and $115.39 respectively, indicating a bullish trend [3]. - The Moving Average Convergence Divergence (MACD) stands at 6.31, suggesting continued upward momentum, while the Relative Strength Index (RSI) is at 68.00, indicating healthy buying pressure but nearing overbought territory [4]. Supply Chain Challenges - The H20 chip, crucial for Nvidia's AI hardware, is facing production delays in China, which is a significant market for the company [6]. - Issues such as slower rack production and power supply constraints are contributing to mixed sentiment regarding Nvidia's performance [6]. Market Sentiment - Despite a nearly 25% increase in Nvidia's stock over the past month, there are concerns about whether the stock can maintain its bullish trend amid potentially weak guidance [7]. - Long-term confidence remains, with expectations of around $5 in earnings power for the year, despite short-term supply issues [6].

Core Viewpoint - Super Micro Computer (SMCI) stock has surged over 33% in two trading days due to an analyst upgrade and a $20 billion partnership with DataVolt, but the company faces critical issues with low and declining margins [1][2]. Financial Performance - As of Q3 FY'25, Super Micro's gross margin is 9.6%, down from 11.8% in Q2 FY'25 and 15.5% in Q3 FY'24, while net margins are under 3%, significantly lower than industry peers like HP Enterprise and Nvidia [2]. - Diluted EPS for Super Micro declined to $0.17 in Q3 FY'25, down from $0.51 in the previous quarter and $0.66 a year ago [2]. Revenue Growth vs. Margin Compression - Revenue increased by 19.4% year-over-year last quarter, with projections of over 45% growth this fiscal year and another 35% next year, but low margins may hinder meaningful earnings gains [3]. - If margins remain low, Super Micro risks scaling a low-margin business that could be challenging to manage without creating shareholder value [3]. Technological Advancements - Super Micro has successfully implemented liquid cooling technology at scale, overcoming reliability concerns, which may provide a competitive edge in the AI hardware market despite higher upfront costs and margin pressures [4]. Corporate Governance and Controversies - The company has faced controversies, including allegations of accounting irregularities and scrutiny from short-sellers, which may necessitate cautious investment approaches despite recent improvements in financial filings [5].