October 24th, 2023 | 07:30 CEST
Nel ASA, Klimat X Developments, Nvidia - Huge potential in future markets
Table of contents:
"[...] Why should a modular electrolyzer cost more than a motorcycle? [...]" Sebastian-Justus Schmidt, CEO and Founder, Enapter AG
Nel ASA - Quarterly figures ahead
Hydrogen is seen as one of the key technologies for sustainable energy supply in the future. The technology has the potential to drive the energy transition and make a major contribution to reducing greenhouse gas emissions. Hydrogen can be used as energy storage to integrate renewable energies and as a fuel in mobility. In this context, hydrogen is a major growth market for the future, offering many opportunities. Nel ASA wants to benefit from this and has specialized in electrolysers. Recently, however, the market environment has clouded over considerably with the rise in interest rates.
The Company has become the focus of short sellers. The reason for this is the recent lack of success stories. No significant orders have been reported since mid-July, and the next quarterly figures are due on October 25. The EU and the US want to promote hydrogen technology and have issued some ambitious targets. According to CEO Håkon Volldal, this requires a reduction in bureaucracy, accelerated approval procedures and access to funding. The Company also wants to gain a foothold in the US and has chosen Plymouth Charter Township as the site for its 4-gigawatt capacity Gigafactory.
Most recently, they announced their participation in Project HEART, where they intend to develop hydrogen-powered aircraft with partner Protium and Haskel and deploy them on domestic flights in the UK. Nel ASA is also involved in many other innovative projects, but the Company is not yet profitable. The bears seem right with their attitude, but the hydrogen sector is volatile, and a large order can quickly turn the mood. The share continues to fall and is quoted at NOK 7.05. Negative comments from analysts have also contributed to this.
Klimat X Developments - Projects Gaining Momentum
More and more large corporations, such as Apple, Deutsche Bank and some oil multinationals, have already committed to becoming climate-neutral. These companies are obligated to present concrete plans for achieving their net-zero goals. One component of these plans is the purchase of CO2 certificates. This is where Klimat X Developments comes into play with its business model able to provide large amounts of carbon credits. To ensure this, the Company focuses on significant projects that involve reforestation and the restoration and protection of forests and mangroves, all at the same time.
This requires agreements with governments and benefit-sharing arrangements. Just how closely the Company works with government officials was demonstrated at the groundbreaking ceremony in Suriname, a country in South America, when President Chan Santokhi participated in a tree-planting ceremony with other key government officials. Locally, they are working with their partner Pomeroon to protect and restore the mangroves, spanning 30,000 hectares. In addition, they have begun establishing coconut seedlings and planting trees on a 12.4 sq km farm area. Every tree planted is monitored using artificial intelligence provided by the University of Copenhagen through Tree Counter™. In addition to Suriname, the Company is active in Liberia, Yucatan, Guyana and Sierra Leone.
In Sierra Leone, the Company has been cultivating an area of 1,400 ha for 2 years. The project benefits 170 smallholder farmers who have received payments for the 30-year leases. In total, land demarcations have been carried out on an area of 20,000 ha. Mangroves are also to be replanted in Sierra Leone. For this purpose, seedlings from the Company's own nursery were planted on a 10-ha trial area. The market for carbon credits is expected to grow from the current level of around USD 1 billion to USD 30 billion in 2030. The stock established an upward trend on October 16, which would only break with closing prices below CAD 0.115. Currently, one pays CAD 0.15 for a share certificate.
Nvidia - Export Restrictions
Until earlier this year, the term Artificial Intelligence (AI) was elusive to many people. Then ChatGPT emerged, and more and more people seemed to realize the groundbreaking technology awaiting humanity. AI has the potential to revolutionize almost all industries and create new opportunities. The demand for AI solutions is steadily increasing as companies and organizations realize AI's benefits. However, this requires computers with the appropriate hardware, and since Nvidia has long been considered a pioneer in AI, its stock price has jumped.
Since October 17, the US government has once again tightened export restrictions to China. In the short term, the new requirements are unlikely to have much impact on Nvidia. However, things could look different in the long term, as the Company makes up to 25% of its sales from data centers in China. Sales for the A800 and H800, which were developed specifically for the Chinese market, now require approval. The trade war between the US and China thus continues. China has recently restricted exports of graphite, for example. The raw material is essential for the automotive industry, as graphite is used in many lithium-ion batteries.
Although AI has made impressive progress, the technology is still in its infancy. Numerous challenges exist, such as the ethical issues surrounding AI, security and privacy. Still, AI is seen as a great growth market for the future, even with a possible recession. Nvidia's revenues and profits have risen decently, but the stock has also peaked at over 250% since the beginning of the year. It has lost over 20% from the high and currently stands at USD 408.30. If the gap is closed at around USD 306, it might be a good idea to take a closer look at the share because AI is expected to drive long-term growth for Nvidia.
All three technologies presented have enormous growth potential. Nel ASA is still burning cash, which makes it hard to attract investors in the current environment. Klimat X Developments is under development and may provide large companies with carbon credits in the future. As more and more companies want to become carbon neutral the number of potential customers is growing. The era of Artificial Intelligence has just begun. Nvidia has leveraged its leadership and capitalized on the hype surrounding ChatGPT. The topic of AI is expected to remain in the spotlight in the coming years.
Conflict of interest
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