07. September 2021 | 13:24 CET
Nvidia, AMD, BrainChip, Infineon - Scarcity: These chip stocks are exploding!
The global chip markets remain tight, and a recent PwC study predicts that the global semiconductor market will continue to experience solid growth years. The authors forecast that chip sales will rise to USD 575 billion as early as 2022. Starting from the USD 481 billion in the previous record year 2018, this would correspond to a compound annual growth rate (CAGR) of 4.6% - not even the pandemic slowed this increase noticeably. In Europe, the automotive industry will become the primary sales market for chip manufacturers. A new growth driver is semiconductors to support artificial intelligence (AI) in autonomous mobility. We present a few industry representatives.
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ISIN: NVIDIA CORP. DL-_001 | US67066G1040 , ADVANCED MIC.DEV. DL-_01 | US0079031078 , BRAINCHIP HOLDINGS LTD | AU000000BRN8 , INFINEON TECH.AG NA O.N. | DE0006231004
Born in Munich, he first studied economics and graduated in business administration at the Ludwig-Maximilians-University in 1995. As he was involved with the stock market at a very early stage, he now has more than 30 years of experience in the capital markets.
Nvidia - The clear number 1 in graphics chips
Thanks to robust demand for its powerful graphics cards, shares of Nvidia have nearly quadrupled since early 2020. They are needed in a wide range of applications where processing power and detail matter. Specific application areas include PCs as well as data centers, mining hubs and the automotive industry. The chipmaker's dominant position in the lucrative video game market is one of the main reasons for the enormous sales growth in recent quarters. The segment is now responsible for 47% of total sales and is therefore of paramount importance to the Company. With a unique market position, the upward trend should continue to grow dynamically here.
AMD - Losing market share to the market leader
Nvidia's closest competitor, Advanced Micro Devices (AMD), is struggling to make headway in this multi-billion dollar sector, as the latest market analysis from Jon Peddie Research shows. It says that Nvidia's share of the discrete graphics processor (GPU) market was 83% in the second quarter of 2021, with AMD accounting for the rest. That is an increase of one percentage point each compared to the previous two quarters. As a result, Nvidia successively takes market shares from its competitor AMD. There is almost a monopoly position developing.
Meanwhile, AMD tries to equip its new desktop CPUs with an integrated graphics unit. That would be a novelty for the well-known Ryzen series because only the separate APU models with the suffix "G" previously could access this feature. For users of the processors, this would be a nice addition. This way, they do not have to rely on a dedicated graphics card to use their PC - that would be especially worthwhile for office use. In a celebratory mood, AMD stock owners are probably assuming a special boom for their Company, as AMD's market value has been able to swing up 50% since then.
BrainChip Holdings - Almost like the human brain
BrainChip Holdings is an Australian semiconductor company that manufactures a revolutionary neuromorphic processor called "Akida". This chip is the first fully digital computer chip that functions in the same way as the human brain, i.e. it processes so-called spikes instead of conventional computer data.
The Akida processor can also learn on its own during use, as it improves the overall performance of artificial intelligence systems by significantly reducing latency and power consumption. Because Akida does most of its processing on-chip rather than in data centers, it does not require a constant Internet connection. As a result, it takes so-called edge computing to a whole new level.
The new chip with AI capabilities represents a wide range of application areas, including control of autonomous vehicles, IoT devices and drones. Other areas of application can be found in robotics, medical diagnostics and security. The first Akida chips were manufactured by TSMC in Taiwan and delivered in August 2021. Once commercially launched, management expects BrainChip to attract some of the big names in the semiconductor industry and end-users and electronics companies alike.
BRN stock is based in Australia and is also actively traded in Germany. Its market capitalization is currently around EUR 500 million - not too much for a next-generation chipmaker. Research house Pitt Street sees a price target of AUD 1.45, which represents a potential of almost 200% today.
Infineon - Still in the fast lane
Infineon (IFX) is the largest chip manufacturer from Germany. For the current fiscal year, the Company is showing signs of rapid growth, even though it should expand at a slower pace again in the future. In the media, the shortage of computer chips has been discussed intensively since the beginning of the year, and the megatrend of e-mobility is playing right into IFX's hands. According to the last quarterly report, Infineon benefited from the strongly rising prices for semiconductor products. According to the report, IFX expanded its revenues from EUR 2.17 billion to EUR 2.72 billion compared to the same period last year, which corresponds to an increase of 25%. At the same time, the Company moved back into the profit zone with EUR 245 million, after posting a loss of EUR 128 million 12 months ago.
The Automotive division performed particularly strongly, expanding its revenues by 49% to EUR 1.21 billion within the year. Accordingly, Infineon's products are currently in exceptionally high demand in this sector. Global corporations such as Bosch, Continental and Denso are placing regular orders as more and more high-tech electronic features are installed in vehicles. Infineon's chart is pointing incessantly upward, with a new high of EUR 37.4 reached just this week.
Scarcity moves chipmakers' profits. After the supply backlog has been worked off, the growth momentum is likely to flatten out somewhat, but the megatrend of e-mobility will nevertheless provide further impetus. Producers such as Nvidia, AMD and Infineon are already well-positioned, and the Australian Company BrainChip is just coming onto the market with a new technology - which makes things exciting!