While Wall Street is focusing on Nvidia Corp.‘s (NASDAQ:NVDA) historic rise, the massive capital expenditures driving the artificial intelligence (AI) boom are championing a few other semiconductor “worker bees.”
The End Of The ‘Magical Balance Sheet’
Speaking on Phil Ronsen‘s podcast, Steve Sosnick, Chief Strategist at Interactive Brokers, said the underlying fundamentals of the world’s largest technology companies are shifting.
Tech giants like Meta Platforms Inc. (NASDAQ:META) and Microsoft Corp. (NASDAQ:MSFT) are laying off thousands of employees while simultaneously committing massive sums to build out their AI infrastructure.
These tech behemoths “went from having almost a magical balance sheet” with phenomenal margins and low fixed costs, Sosnick noted, to aggressively spending “double-digit billions” to develop their AI computing capabilities.
Rise Of The ‘Worker Bees’
While Nvidia designs the ultra-powerful processors capturing the majority of financial headlines, Sosnick argues that the immediate beneficiaries of this historic spending spree are actually the foundational hardware providers.
“The beneficiary is something like Texas Instruments. The beneficiary has been SanDisk, Micron,” Sosnick explained.
“It turns out the bigger beneficiaries, at least in this part of the cycle, have not even been the highest-end chips like Nvidia. It’s the worker bees, so to speak—the analog chips, the memory chips.”
This post was originally published here
