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Technology Stocks : Semi Equipment Analysis
SOXX 297.50-2.6%Nov 6 4:00 PM EST
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Elroy
To: Elroy who wrote (90265)5/31/2023 8:23:20 PM
From: Sun Tzu1 Recommendation   of 95383
 
Thank you. I am going to categorize this as a "me too" jumping on the AI bandwagon similar to when every tom, dick, and harry stuck a dot-com to their name to make their stock go up.

Here's what he is really saying: AI requires high speed networks and interconnects, and we make such products, therefore AI adoption is beneficial to us.

I am not arguing with that. But at the end of the day they are *not* an AI company. Their use of the word AI will not change their revenue forecasts. I am assuming that a CEO is aware of how the sales trend for his product is going, even if he didn't know what the end use is - which he seems to have discovered just in the nick of time to hitch a ride on the AI bandwagon.

I actually know a thing or two about datacenters and their interconnects. Suffice to say that NVidia also makes those parts. When you decide to use a bunch of NVDA chips or cards for your AI applications, are you more likely to buy a 3rd party HW to connect them or will you stay with the same firm?

The answer depends on how competitively NVDA has priced their HW. For the most parts, especially for large customers, if the price difference is not too high (read less than 20% for about the same performance), then they prefer to get it all from one vendor in order to limit any finger pointing between vendors should something break.

So in my mind, MRVL is not an AI company by any stretch of imagination. They may benefit from the use case, but that is reflected in their forward guidance. No need for a multiple expansion.

JMO
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