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We are optimistic about AI servers and edge AI in the long term as new favorites!Nomura Kanwangtai Factory Supply Chain


The interest rate hike cycle in the United States has reached a relatively high point, and high interest rates continue to affect consumer willingness and corporate investment momentum. Nomura Investment Trust said that the only thing that can be certain is that AI is the industry with the clearest growth trend, and AI server shipments are expected to be in 2024 The volume is 100~200%. In the long term, we are optimistic about the upstream and downstream needs of AI servers, edge AI, Design Service, IC design and electric vehicles as the focus of stock selection.

The U.S. CPI unexpectedly fell to 3.2% in October, lower than the expected 3.3% and the previous value of 3.7%. The core CPI increased by 4% year-on-year, hitting a new low since September 2021. After the data was released, the government bond yields subsequently fell, and core inflation The decline shows that the fight against inflation has achieved good results. Fed Watch pointed out that the expected interest rate cut in 2024 has been brought forward to May, and the two major negative news have revealed the light.

It is definitely a good thing for the stock market, but there are still variables, including whether inflation will rebound and the impact of rapid interest rate increases on the economy. These are the keys to determining whether the stock market rally can continue. The only thing that can be certain is that AI is the industry with the clearest growth trend. It is estimated that the shipment volume of AI servers in 2024 will be 100~200%. Compared with the annual compound growth rate of about 5% for general servers, AI Servers will definitely remain a key industry in 2024.

Components in AI servers, including ASIC, ABF, cooling, high-speed transmission and other industries will benefit. Looking forward to 2024, the impact of interest rates on the market will be minimized. In the end, industry development trends and company fundamentals will still be the key to controlling stock prices. It is recommended to select stocks rather than market, and look for stocks with competitiveness and industry trends as the focus of stock selection. We are optimistic about the long term. AI servers, edge AI, Design Service, IC design and the upstream and downstream needs of electric vehicles are the focus of stock selection.

Nomura e-Tech Fund Manager Xie Wenxiong said that downstream electronic products including PCs, NBs, TVs, mobile phones and other products began to continue inventory adjustments in the second half of last year, and related semiconductor inventories were also adjusted to a reasonable position in the second half of 2023. It is expected that demand in the upstream, midstream and downstream industries will gradually return to normal growth from the fourth quarter of 2023 to 2024, and AI will bring Taiwanese factories into a golden growth period.

The four major cloud companies in the United States have successively stated that they will expand their investment in AI application services and continue to expand their cloud infrastructure. Apple has begun to invest in the development of AI. Intel and AMD have both announced strong demand for AI servers and are supplying AI to Taiwanese manufacturers. The blockchain market is bullish, and Microsoft, Google and Amazon have all expressed optimistic outlooks on future market operations and increased their capital expenditures on cloud infrastructure.

AI edge computing is gradually beginning to attract market attention, including AI mobile phones, AI laptops, AI home appliances, and AI self-driving cars. The market size of these devices is much larger than that of cloud computing servers, and the business opportunities for edge computing AI explosion are even greater. , and the market size of these devices is much larger than that of AI servers. Once the concept of AI is applied, the business opportunities that can explode will be unimaginable.

2023 is the low point of the PC industry. As consumption power begins to recover, suppliers expect to usher in a super replacement wave of AI PCs in 2025. Bill Gates also said that AI assistants will be born within 5 years, and the corresponding AI PCs also need to be prepared. These are not decades of paper talk, but things that will be seen happening in a few years.

Looking forward to 2024, Xie Wenxiong said that the electronics downstream inventory will return to normal days, and the semiconductor upstream inventory will also gradually decrease in the fourth quarter. The industry outlook will still be clear for the growth of the AI ​​and EV industry next year, and related groups such as AI Server, HPC, ASIC /IP, IC design, heat dissipation, CCL/PCB and other stocks, while Chuan focuses on EV, green energy, domestic consumer demand in the United States, as well as heavy electric, military, aerospace and other related stocks as its layout targets.

(First image source: sutterstock)

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