Chart of the Week
Since its low point reached in October 2022, the Philadelphia Semiconductor Index, made up of the 30 leading US companies in the semiconductor sector, has risen by 65%, but is still 15% below its January 2022 peak.
OUR ANALYSIS
The index rebound observed over the past six months has been driven by companies designing graphics processing units (GPU).
Over the past few years, the market for GPUs has experienced a major boom. Crypto-asset mining created significant new demand for their considerable processing power, which was initially designed for use in video games. However, the decline in crypto-asset valuations from the end of 2021 led to fears of a drop in related demand for GPUs. The launch of ChatGPT in November 2022 proved a game changer given the rapid growth in its user base to more than 100 million in just one month. The accelerating development of artificial intelligence is potentially reshuffling the cards of the global economy, and especially the tech sector. ChatGPT was developed using 10,000 state-of-the-art GPUs designed by Nvidia and this week the company briefly entered the exclusive club of companies with a market capitalization of over a trillion dollars.
Although the manufacturers of these chips are clearly an essential link in the artificial intelligence value chain, Nvidia is not the only beneficiary of this new market. The companies that design the machines used to manufacture the chips are just as vital, while the ability of these machines to produce ever more powerful components is derived from multiple sources of innovation. It is a perfect illustration that, in the long run, innovation, both in software and hardware, remains the principal growth driver for the technology sector.
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Written on June 2, 2023. This is not an investment advice. Opinions subject to change.
See also: https://latribune.lazardfreresgestion.fr/en/sp-500-anatomy-of-the-year-to-date-rise/
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