The big picture: The world has gone mad for AI. Setting aside what the latest AI models are actually good for, it is not surprising that investors are looking for stocks with "AI exposure." Unfortunately, this turns out to be a fairly short list at the moment, and at the top of that list is Nvidia.
In context: For years, hardware makers have observed the attention and valuation multiples enjoyed by software companies with envy. Employees at hardware companies have also longed for the fancy perks their peers receive at software companies, while their hardware teams are fortunate to even have coffee at work. Software may be eating the world, but does that mean only software companies get foosball tables at work?
Editor's take: Much of the focus in semiconductors is on chip performance, and so for many outside the process it can be mystifying why sometimes a "better" chip loses out to a "weaker" chip. To name just one example, Intel still sells a lot of server CPUs despite their poor comparison with the latest AMD or Arm offerings.
Editor's take: The industry has changed a lot in the eight years since we wrote our first analysis on the top five chip companies. We anticipated semis were no longer a growth industry and the only way for companies to keep growing was to win market share (hard) or buy other companies. This is especially true in semiconductors because most of these companies outsource their manufacturing to foundries like TSMC and GlobalFoundries.
Forward-looking: One of the most famous phrases about the value of networks came from Sun Microsystems' Scott Gage in 1984 when he declared that "the network is the computer." That long-time Sun tagline referred more to the value of connecting computers together and the concept of thin clients attaching to a centralized computing infrastructure than cellular networks. Nevertheless, it remains a prescient, pithy synopsis of where the computing and telecom worlds have been headed for the last three decades.
Why it matters: While there hasn't been a whole lot of groundbreaking 5G news on the consumer front for some time, it's clear there's a whole lot of work and innovation happening in another part of the 5G ecosystem: infrastructure. There's growing activity from traditional "compute" industry vendors eager to make an impact on the telco world. Everyone from chip companies like AMD, to server hardware manufacturers such as Dell, to software houses like Red Hat are doubling down on their efforts to help disrupt the market.