One of the biggest recent buyers of U.S. chipmaker shares said Nvidia is one of the few companies that will sustain this year’s U.S. stock market rally, even as rapid advances in artificial intelligence “create more losers than winners.”
Silicon Valley-based Nvidia last week became the first chipmaker to hit a $1 trillion valuation for its technology that powers artificial intelligence applications including ChatGPT, as investors piled into what is seen as an AI development the biggest beneficiaries of the company.
“In the context of Nvidia, it (artificial intelligence) is going to create some winners and some losers. . . “There are more losers than winners” as it disrupts business models across industries .
“The clear winner at this point, besides Nvidia, will be the bigger tech companies, whether it’s Alphabet or Meta or those types of companies,” he added. GQG Partners bought $2.3 billion of Nvidia stock in the first quarter and has since increased its stake.
Nvidia’s shares have soared 170% this year, adding $575 billion to the group’s market value — a rise second only to the $721 billion and $654 billion that Apple and Microsoft have put into it, respectively.
The S&P 500 is up 9% this year, extending a recovery that began in October.
Jain said that while many semiconductor companies may benefit from high barriers to entry and strong demand for their chips, some software and IT services companies may end up “on the losing side” as AI overwhelms some of their businesses and “many The basic things that are being done will be redundant.”
But, as in the dot-com boom, he warned that “it’s hard to predict who’s going to be the winner here, except for a very, very few people . . . Bezos. It’s easy to say I did that, but with hundreds of startups in e-commerce, who knows? Not to mention the company itself has changed dramatically over the years.”
Jain launched GQG seven years ago in Florida. Inflows of $5 billion in the first quarter helped push its assets to around $100 billion for the first time.
The company came into the spotlight this year when it poured $1.9 billion into Indian conglomerate Adani Group after attacks by U.S. short sellers wiped as much as $145 billion of its market value. It has since increased its stake in the Adani group of companies.
The emergence of ChatGPT, an artificial intelligence chatbot, was his “fuse” for rebuilding Nvidia shares, which Jain believes will herald a “step function in earnings” for Nvidia. GQG first bought Nvidia in 2017, but sold it 18 months ago due to concerns about its high valuation.
The launch of ChatGPT last November sparked a surge in demand for Nvidia’s H100 chip, which Jensen Huang, the group’s chief executive, described as “the world’s first computer (chip) designed to generate artificial Artificial intelligence systems and content for human text and images.
Last month, Nvidia released a sales forecast that beat Wall Street expectations by more than 50%.
Jain pointed to divisions within the tech industry, with big profitable tech companies — which make up a lot of stock market indices — being decoupled from loss-making companies and being swept higher in the final stages of a pandemic-stimulus-fueled bull market.
“There were a lot of delusions in 2021, and there are fewer delusions now,” he said. “Quality growth on the tech side is back in frame.”
Nvidia’s main hurdle is whether it can keep up with demand, Jain said. “Companies are always missing out on benefits because they can’t meet demand,” he said. “I think that’s the biggest problem Nvidia has right now.”