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August 28th, 2023 | 07:00 CEST

AI hype soon over? Deutsche Bank, NVIDIA, Globex Mining

  • Mining
  • Gold
  • Investments
  • chips
  • AI
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In September 2022, NVIDIA and Deutsche Bank announced an innovation partnership focused on Artificial Intelligence (AI). The goal: to enhance and secure financial services. A lot has happened since last year's announcement. AI is seen as a productivity booster and "the next big thing." The prices of shares such as NVIDIA have also multiplied since then. This even makes partner Deutsche Bank uneasy. We highlight risks and show alternatives.

time to read: 3 minutes | Author: Nico Popp
ISIN: DEUTSCHE BANK AG NA O.N. | DE0005140008 , NVIDIA CORP. DL-_001 | US67066G1040 , GLOBEX MINING ENTPRS INC. | CA3799005093

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    Brodie Sutherland, CEO, Tocvan Ventures
    "[...] One focus will be on deposits near the surface. These would be good arguments for a quick production decision using the low-cost heap leaching method. [...]" Brodie Sutherland, CEO, Tocvan Ventures

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    NVIDIA: Even AI partner Deutsche Bank remains cautious

    Last week, chip manufacturer NVIDIA scored with outstanding quarterly figures. Quite a few observers had expected that the share could initiate a correction immediately after the figures. The phenomenon of sales following positive company announcements is quite common. However, NVIDIA's results were so good that the stock exploded again. Still, investors should keep in mind that NVIDIA by no means has some sort of monopoly on AI-related sales. The Company produces relevant chips, and computing power is always needed in AI applications. That said, NVIDIA is also far from unrivaled. The billion-dollar subsidies into the chip industry in recent months indicate that there could soon be an oversupply of chips.

    As in the past, subsidies play a decisive role in this. If the state guarantees subsidies, companies need not fear overcapacities, at least in the short and medium term - after all, the investment was low-risk thanks to the state support. If, as is currently the case, several subsidy-driven investments come together, this can lead to oversupply on the market in the long term. Even Deutsche Bank - NVIDIA's AI partner - maintains its Hold rating for the highly sought-after chip stock. However, the German bankers raised the price target to USD 560. Accordingly, there would still be a little more than 20% air to the upside.

    "Adyen Moment" in the chip industry not off the table

    From a chart perspective, the recent hype may have been a flash in the pan - the stock failed to break above the July high. In addition, the market should continue to expect extraordinary things from NVIDIA in the coming quarters. The risk of the Company disappointing investors in the near future is not off the table. The danger of NVIDIA experiencing their "Adyen Moment" remains.

    Globex Mining as a beneficiary of several trends at once

    But where do opportunities even lie in the stock market? One industry that is benefiting from both global subsidies, the nearshoring trend, and digitization and the increased use of AI is the commodities industry. Whereas critical metals, such as the rare earths needed in chips, rechargeable batteries and other modern technologies, used to come predominantly from China, alternative deposits are now moving into the spotlight. The same applies, with some exceptions, to vanadium, lithium and other industrial metals.

    The Canadian company Globex Mining is an investment company with over 200 raw material projects in its portfolio. The unique feature: All projects are located in North America. The trend of nearshoring states that supply chains are increasingly regionalized. Instead of relying on lithium from South America, which may not be mined in an ESG-compliant way and where there may be dependencies on China due to credit, more and more corporate decision-makers prefer suppliers from safe jurisdictions. The US and Canada are among the top choices for products that are also manufactured in North America. Examples include e-cars, semiconductors and products related to regenerative energy.

    Alkali deal creates fantasy - market capitalization of only CAD 45 million

    For about a week, the share of Globex Mining has been on a small upward flight - the Company, which is currently valued at only about CAD 45 million, has gone up by about 10%. The share price increase may also be due to a transaction the Company announced last week. Accordingly, Edison Lithium wants to acquire exploration rights to alkali projects in the Canadian district of Saskatchewan from Globex. The deal calls for a small cash payment of just USD 35,000, but the further details have more potential: In addition to 156,250 shares of Edison Lithium, Globex will also receive a 2% contingency based on sales of any potential commercial production from the properties. Such alkali projects are related to heat storage, innovative battery technology, and application areas such as the glass and paper industries.

    Globex Mining's stock offers access to numerous resource projects around almost all common commodities. The recent exit suggests that more gems remain dormant in the Globex portfolio. Instead of selling the projects, Globex relies on selected partners to develop projects and secures a share of the profits. This business model could attract attention if commodity prices continue to rise. Investors can take a closer look at Globex as a speculative underlying investment - while greed rules around AI and high volatility is to be expected, Globex Mining stands for tangible values, which are somewhat underestimated than overestimated by the market.

    Conflict of interest

    Pursuant to §85 of the German Securities Trading Act (WpHG), we point out that Apaton Finance GmbH as well as partners, authors or employees of Apaton Finance GmbH (hereinafter referred to as "Relevant Persons") may hold shares or other financial instruments of the aforementioned companies in the future or may bet on rising or falling prices and thus a conflict of interest may arise in the future. The Relevant Persons reserve the right to buy or sell shares or other financial instruments of the Company at any time (hereinafter each a "Transaction"). Transactions may, under certain circumstances, influence the respective price of the shares or other financial instruments of the Company.

    In addition, Apaton Finance GmbH is active in the context of the preparation and publication of the reporting in paid contractual relationships.

    For this reason, there is a concrete conflict of interest.

    The above information on existing conflicts of interest applies to all types and forms of publication used by Apaton Finance GmbH for publications on companies.

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    Der Autor

    Nico Popp

    At home in Southern Germany, the passionate stock exchange expert has been accompanying the capital markets for about twenty years. With a soft spot for smaller companies, he is constantly on the lookout for exciting investment stories.

    About the author

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