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Semiconductors

SOXS Bearish Leveraged semi-conductors ETFNVDA turned down today while SOXS rose a bit. On the 30 minute chart is shown to have have been trending down but then reversed in the after-hours trading period albeit with the low volumes typical of after-hours. The relative volatility indicator however showed a dramatic reversal and will be beyond the moving average within the indicator. Overall, I see this as a day trade for June 27th. I have marked out a tight stop loss to minimize risk. This trade which I will enter in the premarket is expectant for 8-9% profit and so a reward to risk of 15:1
AMEX:SOXSLong
by AwesomeAvani
NVIDIA - A Scenario Few Are Considering. Few. Few. Few.NVIDIA's price action last week was a historic event in the markets, and at a very strange time. Whenever you see such an outlier, it's time to perk up and really give a deep think to what's going on in the world at large. For me, I had long since anticipated NVIDIA would print a new ATH, but I did not believe it would do it until the markets at large had started to moon, which I stated in a March call, which turned out to be pretty accurate. NVDIA - Expect Sideways Until Bear Puts Expire Worthless The fact that a megacap could take out the November of 2021 highs before the Fed started hiking is extremely indicative of what's going on, namely that the indexes and the market at large are sure to follow. I've heard some pretty good theories that NVIDIA being able to do what it's done has a lot to do with Chinese Communist Party entities running a "boomerang" through Cayman Islands-based proxies that are shuffling liquidity through big enterprises like the US banks located in Hong Kong. NVIDIA also reportedly relies on Taiwan-based TSMC to make its processors, and right now, Taiwan is the springboard for the western globalist interests to attempt to take control of Mainland China when the CCP collapses in the upcoming future. The Party has recently stated that the mainland is scheduled to get hit up by 60 million new cases ***per week*** of the nouveau variant of the Omicron version of the Wuhan-originating Coronavirus Disease, and yet the Communist Party is not reporting any hard figures on case counts and death through the global faucets, and has not since Xi dropped the Zero COVID social credit scheme in January. And on top of that is the soon-to-be 24 year long persecution of Falun Dafa by Jiang Zemin and its Shanghai faction combining with the CCP itself, a persecution that targeted 100 million people and committed the unprecedented sin of live organ harvesting. The sin of the persecution is so enormous that once brought into the public eye, no matter who you are in this world, you'll be brought down as retribution for evil. So there's a lot to watch out for in geopolitical tensions, and a lot at play. The biggest thing right now is that the markets are set to pump to provide people with a new distraction as they try, once again, to get rich, and quick, instead of paying attention to what is important in life. Everyone is now convinced that NVIDIA is unshortable, and some are even looking for a mild pullback to go long on the "parabolic trend line." Frankly speaking, there's a lot of risk in buying ATHs when you're dealing with something governed by a clever MM, and if the Q2 ER scam doesn't convince you that NVIDIA's MM is clever, "Sorry, I don't have time to explain it to you." In making this call, I would like to say that NVIDIA going parabolic is pretty likely. I'd also like to say that some formation like this, which we saw on Sun Microsystems in the Dotcom bubble, is also pretty likely: If the Sun fractal is valid, then this call is invalid. How it would play out is kind of like what Boeing did in 2018-19: Or what BTC CME Futures has already done Meaning that shorting will remain extremely risky, but going long won't necessarily have any opportunities to meaningfully pay. However, if the MMS are intending to conduct a turtle soup into a three drives/three Indians pattern, you do actually have the opportunity to Shortgod the top, get long at the bottom, and collect an even bigger trade. What this would involve is that starting in June NVDIA begins to retrace, and if it were to be so, it would likely retrace with a consistency that is as good as selling volatility has been in the last 9 months. It would refill the May gap completely, and rebalance the unbalanced March gap, which coincides with the recent market structure's range equilibrium at $250 and the week of April 24's pivot. Many have said that the debt ceiling crisis being resolved by the Federal government often results in a stock market crash since the market has to absorb all the new TBonds that the Treasury has to issue to keep the government afloat. If you couple that with how the market didn't go down at all during the debt ceiling crisis itself, a bear impulse appears more and more likely. If it were to do this, NVIDIA would also never print a $1 trillion market capitalization despite being so close. NVDIA likely would quickly bounce at this point and then the target would be one standard deviation above the May high, coming in at $540, which would also take the psychological $500 level. Doing this will encourage and trap bears all the way down, and then slaughter bulls over $500. Doing this will slaughter the bulls that have already bought the top, and at present, the bears have literally all been killed. Projected time frame for this to happen would be something like a September bottom and the top would come in the middle of '24 with the next U.S. Presidential Election on the horizon. Of course, that assumes that the world remains in good enough shape to be stable in any way a year from now. I do not have conviction that this will be the case it will play out, but I wanted to post this theory because the timing, logic, and price action all support it strongly, and it's the one scenario that nobody is considering, which also happens to generate a lot of alpha if you can get on top of it.
NASDAQ:NVDA
by LordWrymouth
6
SMH Update (daily chart)SMH recently peaked at 151.71 on May 30, leaving behind two gaps for potential fill in an area of low volume (yellow volume profile highlight). I am expecting a selloff into the gap areas, which also are at key fib levels. 5/30: peak = 151.71 143.89 = 76% fib (Touched today, and 5.2% off peak) 139.05 = 61.8% fib ( 8.3% off peak) 135.14 = 50% fib (10.9% off peak) The volume profile is based on quarter to date activity, March - today, June 5. I do not expect a bounce off today's low, the 61.8 % or 50% fib areas look more realistic to me.
NASDAQ:SMH
by UnknownUnicorn13101
ASML makes the technology that makes semiconductorsASML is shown here on the one-hour chart as having a great quarter with consecutive favorable earnings It has moved above the blue volume trading range on the profile. The accumulation distribution indicator shows persistent and high accumulation. The volume heat map shows recent heat volume spikes. Since ASML has products essential to chip- manufacturing and is the leader in its field it is very well positioned for the AI boom that is underway according to all the chatter. ASML is one of the IBD Top 50 tech stocks. If the chart is zoomed out, there is a rising wedge which might be a bit of bearish bias. Overall, I see this as a long setup worth buying.
NASDAQ:ASMLLong
by AwesomeAvani
NXPI Semiconductors: Bullish ABCD BAMM ProjectionNXPI is trading within a weekly consolidation structure that appears to be bottoming out and preparing to make at least an 0.886 retrace, and recently it has formed a Bull Flag and it has also confirmed Hidden Bullish Divergence on the Monthly with a MACD Bullish crossing. Out of all the big chip suppliers, NXPI is one that has yet to make any crazy moves up and is still trading within a value area, but that likely wont last long as it catches up with the rest of the sector as it is an active supplier within the sector.
NASDAQ:NXPILong
by RizeSenpai
$NVDA Is it time to SHORT NVDA yet??NASDAQ:NVDA Is it time to SHORT NVDA yet?? Is it time to short NVDA yet?? No… but if you’re long, I’d recommend setting your stop loss to 289 and shorts as soon as you see a candle close under 298.51 it’s time to short…. This may change if we go higher, but as it is here this is the plan…. I will make a video soon with how to set up these indicators for the actual short entry… So many people salivating to go short knowing that the AI hype has bubbled this to delicious shorting proportions… I think the time is near, but I’m waiting for confirmation…
NASDAQ:NVDAShort
by SPYder_QQQueen_Trading
13
Undervalued GrowthCOHR caught my attention for a few reasons. 1st. It is ≈11% of total holding of Scion Asset Mngt holdings, one of the best performing funds since 2008. 2. Technical: SP trading in demand zone, appearing to possibly be in process of forming a double bottom- confirmed on 3 day rule, vol, etc. passing 46.46 area. 3. Valuation: Currently at steep discount to competitors despite continual growth in earnings. significantly below sector by almost every metric... EV/EBITDA TTM 16% below; FWD- 40% below, P/S TTM/ FWD- 63/65% respectively, Price/ CF- 79% below. Trading about 50% below 5 year PB and 55% 5 year P/Cash flow. 4. Growth: Rev Growth YoY 177% above sector; FWD-116% above sector, significantly above sector by almost every metric besides ROE.
NYSE:COHRLong
by Jrussell86
1
All about artificial intelligenceOn the 10 March 2023 episode of the Behind the Markets podcast, we had the pleasure of speaking with Blake Heimann, Senior Associate, Quantitative Research at WisdomTree. Within our team, we spend a lot of time talking about artificial intelligence (AI) with Blake, especially lately. Years ago, he was bitten by the bug, gaining a passion to study such things as statistical methods, regressions and time series forecasting. He’s even pursuing a Masters degree presently, focused on AI and machine learning. With the release of ChatGPT from OpenAI in the latter part of 2022, AI entered into the public’s consciousness in a manner reminiscent of some of the world’s most successful applications—such as TikTok and Instagram. We wanted to have this conversation in order to provide perspective on AI and help people in thinking about the space itself as well as avenues of potential investment research. Some of the topics we covered included: ChatGPT It’s difficult to say how long we’ll be focused on ChatGPT or the value that it may bring, but it speaks to how AI is a space subject to nonlinear advances. A lot of work and investment went into creating ChatGPT, and then it represented something very tangible for any person to see and experience. We have to remind ourselves that next year we may be talking about something entirely different and even more capable, but we also admit that competing with ChatGPT purely on the basis of ‘viral adoption’ would be quite a feat. Graphics processing units (GPUs) and the discussion of Nvidia vs Intel Within semiconductors, Nvidia has had an excellent run, almost branding itself as the company most capable of designing the best semiconductors upon which to train AI models. Intel, on the other hand, has stumbled on some of its more cutting-edge hardware releases and has even had to cut its dividend recently. We were able to talk to Blake about how to consider the differences between these companies in the present market environment. Ambarella for computer vision chips We didn’t want to fall into the trap of only discussing some of the largest and most recognisable semiconductor firms, so we asked Blake if there were any semiconductor companies out there that he, as someone more deeply involved in AI and machine learning, is excited about. He did not hesitate and noted Ambarella. Ambarella is designing specific chips that are involved in computer vision, specifically as it relates to autonomous driving, and Blake went into a discussion about image segmentation and how these chips are getting better and better at performing these rather involved calculations directly, in almost real-time. Proliferation of data and opportunities for AI disruption The biggest reason, in our opinion, that we are discussing things like ChatGPT and autonomous driving, is that we have recently gotten to a place globally where we are generating more data than ever before. We asked Blake, with the proliferation of this data, what industries he believes are most ripe to be disrupted in terms of AI providing something powerful in a faster, more efficient way. Blake noted that this can happen in many industries, but then he did settle on the concept of using AI for drug discovery—namely how models can suggest potential compounds and molecules that can have the potential to react in a beneficial way to help with therapeutics. While AI may not directly create drugs end-to-end, it may suggest interesting paths for researchers to try and cut down the overall time from concept to finished drug. Conclusion: always look at the direct functional expertise for any AI company There is a big difference between a company that mentioned AI a few times on a recent earnings call, versus a company that is directly providing AI as a solution to real, current-day problems. Blake noted in numerous ways the importance of always being able to see the specific AI function being performed by a given AI company in order to help judge is potential attractiveness as an investment.
NASDAQ:NQINTEL
by aneekaguptaWTE
NVDIA - Expect Sideways Until Bear Puts Expire WorthlessEver since NVDIA went up after its February earnings call, it seems that social media traders have been afflicted with a fetish for trying to short it. There's all sorts of fundamental reasons, they say, such as NVIDIA is trading at blah blah times P/E, AI doesn't actually need chips beyond the initial machine learning phase, and of course the top reason that everything should be bearish: the Federal Reserve isn't pivoting! None of that matters. One of the biggest pieces of wisdom I can share with you is that fundamentals do not matter in the way that you're led to believe that they matter. If the markets really worked that way, then there would neither be bubbles nor would there be undervalued stocks. If everything algorithmically traded in line with what "it was truly worth" you would have no opportunity at all to make (lose) any money, would feel bored with the computer, and would go outside. The fundamentals to the market at large right now, including with the recent collapse of regional banks and Silicon Valley Bank, is that everything in this world is revolving around "relationships" that companies, people, organizations, and communities have established with Xi Jinping and his Chinese Communist Party. This especially includes what happened during the Coronavirus Disease 2019 pandemic and the world's response to the disease. Too many people have, for the sake of the economic and recreational benefits that the Chinese Government has offered, imported the CCP's cultural revolution stuff back home. And yet, the CCP under the Jiang Zemin faction is guilty of almost 24 years of persecution against the 100 million practitioners of Falun Gong meditation, which involves the unprecedented crime of live organ harvesting as a form of torture (Kilgour-Matas Report). And the result is a lot of business and social practices have developed under the Party's method that amount to cancers festering in the world's body. If you want to get rid of a cancer, you have to not only cut it out, but get rid of the root cause and the behaviors and habits that give the disease the environment it needs to lump around. The thing about NVIDIA is that it has a story. Stories matter more than fundamentals in the short term. In the long term, fundamentals matter more than stories. This is because a small group of whales needs a pretext in order to bait in a large number of fish and a moderate amount of sharks to feed on, and this operation is a short to midterm play that revolves around the longer term fundamentals, which cannot be avoided. NVIDIA's story is that there's a cool Chinese guy with grey hair running the company wearing a leather jacket. He says that he can sell a lot of chips right now and quickly exceed the very worthless crypto mining boom because GPT4 and STABLE DIFFUSION and the AI REVOLUTION need GRAPHICS CARDS more than rich kids need $1,800 graphic cards to be addicted to video games instead of having jobs and girlfriends. Well, I'm a price action trader. I think the charts show the truth of the markets and their combined understanding and the candles reflect the operation in play. Zoom out, is what they always say: NVIDIA on the monthly, when it dumped in October, took out a long term low from 2021. Taking out a low all on its own doesn't mean much, but my friends, when a highcap takes out a big low AND THEN ALSO bounces 74% over the next three months, and instead of heading towards making new lows, goes ahead and makes a new high the next month, why are you shorting something that's going up? Look at this pattern on the weekly and ask yourself what you really find appealing about buying puts on this besides hearing all the rabble in signal groups and on social media yell about HOW OVERPRICED this stock is and how IT SHOULD GO TO ZERO. IT'S GOING TO ZERO. And even more so now with NVDIA closing at ~$270, this is the worst time to trade it. You've already missed the boat to go long, and going short has destroyed a lot of accounts. You're at the apex of an inflection point, and the scenarios on both sides are very simple: 1. If it's bearish, then the MM is short from the early '22 pivot parked under $300, and bears are about to get what they want. 2. But that pivot is right under the $300 psychological level where big short positions now have their stops 3. If NVDIA is truly bullish, it will take out that pivot, sweep $300 and then is likely to retrace 4. But for bears, it doesn't make sense to give them a way out and retrace like that. 5. Thus, the most annoying thing the MM can do is to park price in this $255-275 range for several weeks and kill everyone's put and call premiums while selling the contracts 6. This means no retrace. Instead, when everyone's lost all their money going short, and it doesn't dump and NVDIA does go over $300 in May or June, price doesn't look back and sets a new all time high 7. Bears bamboozled and in disbelief about how a tech stock can set a new ATH during FEDERAL RESERVE RATE HIKES If you want to make money in trading, you need to put risk management at the top of your priority list. What's really implied by this is that you stop gambling. The way you stop gambling is by changing your heart and your intentions in trading. You have to stop wanting to get rich. If you try to change your life with gambling then you will, as a result, ruin your life. Literally everyone knows this and yet people still try to make their lives "happy" through gambling. What you're trying to so is solidly and systematically increase your account on a compounding basis. To do this, you need winning trades and not losing trades. To do this, this means you need less trades, because let's be honest, most of your trades are losers. In order to achieve all of the above, you need to quit listening to influencers and Discord and Telegram signal groups, delete the Marxist social influencing website Reddit, and start thinking for yourself. You have to understand that a lot of these people do not trade themselves. They make their money grifting you for subscriptions and from behind the scenes for pushing certain things on their followers. You think from looking at how they talk and how they act and what they say that they're making a lot of money and are very successful, but almost all of them are either total frauds or losing traders. Stop looking up to "heroes." There are no heroes. There's just you and your life, and you're in a very harsh and adversarial environment where the moral standard is very low and the people around you have very, very poor values. You need to make sure that your moral standard is high and that you have values and ideals that you can stand in front of your grandchildren with and hold your head high. Also, genuine winning traders are both few and far between, and generally do not carry a high profile. People who have survived in the markets for a while also understand both how easy it is and how painful it is to lose money. They understand how hard money is to get it back once it's been lost. And thus, they aren't out there cowboying around. You shouldn't listen to what I tell you either, because you need to think for yourself. If you don't get sober and rational now, then when this world really changes as the Chinese Communist Party falls, a day which is extremely, extremely close, you won't have a chance to make it through the tribulation, because the requirement to pass through is that you have clean hands, a clean heart, and have chosen a bright future for yourself.
NASDAQ:NVDA
by LordWrymouth
4
When Chips Are Down, They Rebound Slowly But StronglyWhen Chips are down; invest if you can and hedge if you must. Having soared in 2020 & 2021, semiconductor shares tanked brutally as tremors from geopolitics, sinking consumer confidence and bloated inventory struck. Q4 overhang is dragging the industry down in the near term, which might have set a bearish outlook in the short-term, but times are changing. Structural forces and business cyclicality are now becoming robust tail winds for semiconductors, bringing a bullish outlook in the medium-to-long term for the sector. Therefore, this case study argues that an asynchronous time spread in CME E-Mini PHLX Semiconductor Sector Futures ("CME Semiconductor Futures") could potentially deliver a 2.8x reward to risk ratio by first taking a short position in futures expiring in March 2023 followed by a path-dependant long position in futures expiring in September 2023. INDUSTRY ON THE CUSP OF A SUPERCYCLE Chips everywhere. Semiconductors are ubiquitous as products become sophisticated. Rapid growth of mobile devices, emergence of EVs, and rising cloud adoption have created endless demand for higher processing speeds and larger memory. Chipmakers have benefited from this trend. Anticipated exponential growth in consumer durables, IoT, gaming, EVs, and AI/ML will translate into strong sustained demand for chips. Speaking at World Economic Forum, Microsoft CEO Satya Nadella asserted that AI would go mainstream not in years but in months. Emergence of generative AI will form a fresh stream of demand for chips. EVs require twice as much chip content than traditional ones. Rising cloud usage will amplify demand from datacentres for graphics processing units (GPUs). In short, semiconductor industry is on the cusp of a demand super cycle. DEMYSTIFYING THE SEMICONDUCTOR INDEX The Philadelphia Semiconductor Index ("SOX") is a market capitalization-weighted index comprising of the top thirty (30) semiconductor firms listed in the US. Top names include Nvidia, TSMC, and ASML forming 48% of SOX. The top ten comprise 80% of the SOX. SOX rallied 202% from its low in March 2020 to its high in November 2021. As monetary policy shifted from QE to QT, SOX plunged 46% in 2022 touching its lowest level in October 2022. Since then, it has bounced back 43%, outperforming both NASDAQ-100 and S&P 500 which are up merely 10% during the same period. A CYCLICAL INDUSTRY Semiconductors industry is inherently cyclical given the considerable time lapse between spotting fresh demand and matching them with new supply. In a recent report, JP Morgan cited that semiconductor stocks are close to a cyclical bottom. Each time the industry hits a bottom, it recovers impressively. In one-year and three-years following a cyclical dip, shares in this sector spike 40% and 95% on average, respectively. While short term demand looks bleak on waning consumer confidence, the USD 600-billion industry's long-term prospect looks resolutely bright. LET THE AI WARS BEGIN Revolutionary AI: ChatGPT made its debut in November. It sprinted to a million users in just five days. The excitement in generative AI is palpable. It will revolutionise content generation while delivering vast productivity gains in others. Inflection ahead: AI is approaching an inflection point. Its usage is going mainstream. Expect tech giants to invest heavily to outcompete. If this marks the start of AI wars, the semiconductor firms that make AI work will harvest outsized profits. Shovel makers hit jackpot: During the gold rush, it was the shovel makers that got rich more so than the diggers. In this AI gold rush, the shovel makers (i.e., the semiconductor stocks) are set to reap enormous gains. Nvidia already shining: Nvidia is the market leader in GPUs whose parallel processing capabilities form the core for delivering AI. ChatGPT adoption alone could bring incremental revenues of up to USD 11 billion over the next year, Citigroup estimates. TSMC & ASML well positioned: Nvidia GPU production depends on two firms - (a) the Taiwan Semiconductor Manufacturing Corporation (TSMC), and (b) ASML Holdings (ASML). Berkshire stake in TSMC: TSMC recently announced stunning Q4 earnings. Its net sales grew 42.8% YoY, while its net profits & EPS were up 78% YoY contributing to an ROE of 26.4%. Little wonder that TSMC was one of Warren Buffett's recent investments where his firm acquired USD four billion of TSMC shares last November. ASML dominance: Meanwhile ASML commands a monopoly on key tech (Extreme Ultraviolet Lithography or EUV). EUV is used in producing cutting-edge nano chips that AI requires. ASML is set to secure a windfall on rising AI adoption. CHIPS ACT TO RESHORE PRODUCTION Supply chain disruptions caused by the pandemic exposed the vulnerability of over-reliance on globalisation. Russia-Ukraine conflict caused adverse impact with Russia being a major supplier of Palladium and Ukraine being a key source of Neon gas. To reduce over-reliance in a key industry, US last year legislated the CHIPS Act which is aimed at reshoring production on US soil supported by more than USD 150 billion of grants and tax incentives. NO PAIN, NO GAIN IN A V-SHAPED PATH AHEAD Supply ramped-up but a little too late: Clogged supply chains plus demand spike during the pandemic fuelled chip shortage. Ramped up production which always takes a long lead time arrived but at a time of pale consumer demand (PC demand down 28% YoY) late last year. Frail consumer sentiment: Persistent inflation, recession fears, and uncertain outlook, meant lower consumer durable sales. This has slashed demand for semiconductors resulting in one of the largest inventory corrections in the industry. The sector is cooling faster and getting colder than expected. Firms face a tough market saddled with excess inventory compounded by frail end-markets except for automotives. Downgraded chips: Intel reported a loss for Q4 last year and expects a weak first half this year with return to growth in second half. Earnings from other industry majors point to significant headwinds. Analysts have downgraded several chip stocks. Fund flows in ETFs: Fund flows into and out of leveraged ETFs this year show investor activity is moving in tandem with these macro shifts. The Direxion Daily Semiconductor Bull 3x ETF (3 times long exposure to SOX) suffered net outflows of $341 million while the Direxion Daily Semiconductor Bear 3x ETF (3 times short exposure to SOX) gained net inflows of $1.1 billion. Insiders are Net Sellers: Insider Activity among majors show that they have been net sellers over the last three months except for Qualcomm, Intel and Applied Materials. Bullish Price Targets: In sharp contrast to this gloomy outlook, analysts covering the top stocks anticipate an average +15% price gain over the next 12-months. TRADE SET-UP This case study proposes a two-legged calendar spread as set out below. Each CME Semiconductor Futures contract provides exposure to twenty-five (25) index points approximating to USD 75,000 in notional with required margin of USD 5,900. TRADE LEG 1 : A short position in the contract expiring in March 2023 will provide exposure to the short-term correction. Entry: 2978 Target: 2571 Stop Loss: 3180 Profit At Target: $10,175 Loss At Stop: $5,050 TRADE LEG 2 : A long position in CME Semiconductor Futures expiring in September 2023 will provide exposure to recovery in the latter part of the year. Entry: 2710 Target: 3718 Stop Loss: 2410 Profit At Target: $25,200 Loss At Stop: $7,500 Aggregate Reward-Risk Ratio: 2.8x MARKET DATA CME Real-time Market Data helps identify trading set-ups and express market views better. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com DISCLAIMER Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services. This material has been published for general education and circulation only. It does not offer or solicit to buy or sell and does not address specific investment or risk management objectives, financial situation, or needs of any person. Advice should be sought from a financial advisor regarding the suitability of any investment or risk management product before investing or adopting any investment or hedging strategies. Past performance is not indicative of future performance. All examples used in this workshop are hypothetical and are used for explanation purposes only. Contents in this material is not investment advice and/or may or may not be the results of actual market experience. Mint Finance does not endorse or shall not be liable for the content of information provided by third parties. Use of and/or reliance on such information is entirely at the reader’s own risk. These materials are not intended for distribution to, or for use by or to be acted on by any person or entity located in any jurisdiction where such distribution, use or action would be contrary to applicable laws or regulations or would subject Mint Finance to any registration or licensing requirement.
TVC:SOXLong
by mintdotfinance
2
What is ChatGPT and why is AI suddenly a big deal?The latter part of 2022 and the early part of 2023 have seen many developments around ‘generative AI’. The big story recently concerns the ChatGPT system. Conceptually, there is a prompt, and then the system can come up with text to match the prompt. ChatGPT has ‘gone viral’ in that many people have delighted in experimenting with different prompts to see what comes up. It’s also the case that other systems have also recently been developed where the output may be a picture or a video. Broadly, these systems are taking a prompt and then using their training data in order to predict something that makes sense against the prompt as an output. The world hasn’t seen these capabilities until now, so there are many speculations as to what it means in terms of intelligence or what types of business models will make sense to build against it. More than just a craze: the real-world applications of AI A tool like ChatGPT is training on large amounts of data to make predictions. People use it now as a novelty—it can predict the next likely word in a string of text within the context of a prompt. It can, however, be trained to predict other things, and these predictions, if they are accurate, could be valuable. There are tools already in existence that help software developers with coding, predicting the likely ‘next line of code’ for them to write. It will be interesting to see how Microsoft, a major investor in OpenAI, the company behind ChatGPT, looks to integrate the technology into something like Microsoft Office 365, which would mean nearly instant exposure to billions of users. It’s really only when you expose billions of people to a given piece of technology that you really start to see all the various potential use cases. During 2022, DeepMind unveiled new results from its AlphaFold system, which is designed to predict the shape of proteins. The system had come up with outputs specifying the predicted shape of more than 200 million proteins, and a significant percentage of these predictions were viewed as being as accurate as experimental results. Predicting the shape in which a given protein will fold, by itself, means nothing, but it becomes exciting when you start to consider that frequently the shape of the protein encodes the function of the protein, and the function could relate to many distinct therapeutic outputs that could then be used to fight diseases and other health problems. Who stands to gain? It is difficult to predict which industry or company will benefit the most from AI applications because it’s possible that any company or industry that uses data could benefit. It is natural to think of the large technology companies—Amazon, Apple, Meta, Alphabet, Microsoft to name a few—and you can see how AI is being used to directly enhance the experience of their customers. Amazon and Microsoft, in particular, offer AI services through their cloud computing platforms. However, it’s also true that pharmaceutical companies could benefit in drug discovery, insurance companies could benefit from better predictions - the list is endless. We find it exciting to think about how different developments can build on each other. Take fusion power as an example. We have already seen that different machine learning systems may unlock novel ways to manage the reactions and control the system. If we can combine machine learning with certain quantum computing capabilities, maybe the calculations can broaden in scope and advance in speed in ways to allow further developments beyond what is possible today. AI depends on data, and quantum computing may allow certain types of calculations to occur in parallel, taking on more data and having flexibility to instantly adjust. One thing we remind people of is that, 20 years ago, many of us didn’t have regular internet access—certainly not high speed. Can we really predict where we’ll be 20 years from now? AI against the macroeconomic backdrop If we are looking at the world in March 2023, the biggest near-term catalyst is most likely the macroeconomic backdrop as viewed through 1) announcements from the US Federal Reserve (Fed) 2) data on the US labour market 3) data on the path of inflation and 4) anything related to whether or not there is a recession. Many of these announcements have directions that are either ‘more positive’ or ‘more negative’ for the companies that represent the AI landscape. For example, a Fed that is less likely to be raising interest rates further is better for AI stocks than a Fed that believes that many more rate hikes are necessary to fight inflation. 2022 was a tough year for equities, especially technology stocks. Within artificial intelligence, the companies that were newer and that did not yet have positive earnings in established businesses saw their valuations decline. Part of this is natural, in that higher interest rates and expected positive earnings far in the future combine into an entity with an overall lower valuation. Additionally, we consider many specific semiconductor companies to be heavily exposed to artificial intelligence. Many of these companies have seen share prices drop due to declining demand for smartphones and personal computers, which means the demand for chips has been lower in light of increasing supplies and capital spending projects. What next for AI? Artificial intelligence is a megatrend that has a chance to impact every sector and nearly every other megatrend. Currently, there is a viral excitement around ‘generative AI.’ ChatGPT is the key example of this concept. Even if articles abound on the expected valuation for OpenAI, the company behind ChatGPT, it is not yet clear how generative AI will create revenues and profits in the near term. The giant cloud computing platforms, like Microsoft Azure and Amazon Web Services, allow many users to take advantage of AI and machine learning and may be best positioned to drive revenue from the theme. Either way, artificial intelligence is a growing landscape and recent developments have once again brought AI conversations to the fore. Whilst a software like ChatGPT may, at first glance, be dismissed as a ‘novelty’ it is clear that applying the power of AI to different industries (from manufacturing to healthcare) could have a genuinely transformative effect on the world we live in.
NASDAQ:NQINTEL
by aneekaguptaWTE
SOX Update (weekly chart)SOX, as well as the broader XLK, has diverged somewhat from SPY, and remains stubbornly above the 52 week EMA. The red D point is a longer term Gartley target based on a 61.8% retrace from point C. However, it is still in an Ichimoku resistance area, and has potential to reverse. Key support areas are; 1) 2854 -2794 DOJI, and potential pivot area 2) 2848-2742 Blue Point B, a prior swing high and potential pivot area 3) 2838 Gann Confluence Point and potential support Should pivot areas 1) and 2) above fail, the final point to watch is the Gann Confluence around 2838. A fail below this point would be bearish. Also, an extended stay below the 52 week EMA would be bearish. Presently the chart sits above the longer term downtrend set from 1/22 high to 10//22 low and has a ways to go before that channel should continue.
NASDAQ:SOX
by UnknownUnicorn13101
1