2025-12-01 01:29Summary of Conference Call on U.S. Semiconductors Industry Overview - The discussion centers around the U.S. semiconductor industry, specifically focusing on companies like NVIDIA (NVDA), Broadcom (AVGO), and Advanced Micro Devices (AMD) [1][2][3]. Key Points and Arguments 1. Google's TPU Chips: Google is reportedly in talks with Meta and other cloud customers to allow them to run Google's TPU chips in their data centers, indicating a potential expansion of TPU usage beyond Google [1]. 2. Success of TPUs: Google's TPUs are highlighted as the only successful ASIC program that has reached scale, with over a decade of development in partnership with Broadcom [2]. 3. Compute Scarcity: The current market theme is compute scarcity, with companies like OpenAI diversifying their approaches to secure more computing resources. NVIDIA has indicated strong revenue visibility, projecting hundreds of billions in future revenue [3]. 4. Market Size and Growth Potential: The focus should be on the overall market opportunity rather than the ASIC vs. GPU debate. The market for AI hardware is not yet mature, suggesting that both GPUs and ASICs can thrive if the market remains large [4]. 5. Broadcom's Position: Broadcom is positioned as a clear winner in the ASIC market due to its partnership with Google. The stock has performed well, and estimates for AI revenue are expected to rise significantly [5]. 6. AMD's Challenges: The news regarding TPUs may negatively impact AMD's narrative, as the company has positioned itself as a second source to NVIDIA. If TPUs gain traction, investor confidence in AMD's long-term targets may wane [6]. 7. Investment Recommendations: The recommendation is to own both NVIDIA and Broadcom stocks, as both have strong narratives. NVIDIA's valuation appears attractive despite recent sell-offs [7]. 8. Stock Ratings: NVIDIA and Broadcom are rated as Outperform, while AMD is rated as Market Perform [8]. Financial Metrics - NVIDIA (NVDA): Current price at $182.55 with a target price of $275, showing a potential upside of 21.9%. Adjusted EPS estimates for 2024A, 2025E, and 2026E are $2.99, $4.66, and $7.65 respectively [9]. - Broadcom (AVGO): Current price at $377.96 with a target price of $400, indicating a potential upside of 117.0%. Adjusted EPS estimates are $4.86, $6.73, and $9.38 for the same years [9]. - AMD: Current price at $215.05 with a target price of $200, showing a potential downside of 40.1%. Adjusted EPS estimates are $3.31, $3.94, and $5.32 [9]. Investment Implications - The datacenter opportunity for NVIDIA is described as enormous and still early, with significant upside potential. Broadcom is expected to see strong growth in AI revenue, while AMD's growth may hinge on new deals and market recovery [10]. Risks - NVIDIA: Risks include potential business trend volatility, slower revenue growth, competitive pressures, and regulatory risks [17]. - Broadcom: Risks involve unexpected weaknesses in AI demand, execution failures on merger synergies, and management changes [18]. - AMD: Risks include market declines, share losses, and product execution failures [19]. This summary encapsulates the key insights and financial metrics discussed in the conference call regarding the U.S. semiconductor industry and its major players.