NVIDIA's Bold Moves Propel Tech Stocks Amid CPI Concerns

On September 11, US tech stocks rallied sharply, with the Philadelphia Semiconductor Index rising by 4.90%, and NVIDIA (NVDA.US) surging by 8.15%. This significant uptick came as NVIDIA's CEO, Jensen Huang, delivered a confident speech at the Communacopia Tech Conference, highlighting the strong demand for computing power. The company also announced smooth progress on its Blackwell product, which is scheduled to ship in the fourth quarter. Meanwhile, August US CPI data slightly exceeded expectations, reducing the likelihood of significant rate cuts by the Federal Reserve.

Jensen Huang’s speech conveyed strong confidence, emphasizing that the Blackwell product would be shipped in the fourth quarter. Previously, the market had concerns about the uncertainty of Blackwell's shipping timeline due to GB200 scheme adjustments. At the Communacopia Tech Conference, Huang assured that NVIDIA is currently expanding Blackwell's production capacity, with products already in full production and set to ship in Q4 2024 and 2025. He also highlighted two key points: 1) Data centers are transitioning from general-purpose computing to accelerated computing as Moore's Law becomes less effective and CPU performance improvements slow down. 2) The return on investment (ROI) on computing capital expenditure issues is expected to be resolved as accelerated computing, using tools like Spark, can improve processing speeds by over 20 times, making it cost-effective despite higher GPU costs. Huang's speech alleviated market concerns about Blackwell's shipping schedule and addressed the ROI on computing capital expenditures, underscoring the strong demand for computing power.

August’s core CPI data slightly exceeded expectations, dimming hopes for significant rate cuts by the Federal Reserve. Data released on September 11 showed that the overall CPI in August rose by 2.5% year-over-year, meeting expectations, while core CPI rose by 3.2%, slightly above expectations. This small increase, driven by rising housing costs, reduces the likelihood of a significant rate cut by the Fed. Current market expectations, according to CME Group, are an 85% chance of a 25-basis point cut and a 15% chance of a 50-basis point cut in September.

In light of these developments, AI-driven growth in data centers remains a primary driver for the PCB and copper interconnect sectors. Investors are advised to watch companies involved in PCB and copper interconnect solutions, such as Shennan Circuits, Victory Giant Technology, Kingboard Holdings, Walton Advanced Engineering, and Huizhou Speed Wireless Technology. These sectors, benefiting from the advantages of installation, maintenance, and low costs, are integral to AI data center infrastructure.

However, potential risks remain, including fluctuations in AI industry demand, changes in the competitive landscape, delays in product development, and slower-than-expected recovery in the macro economy and downstream demand.

Overall, NVIDIA's strong performance and promising product developments, coupled with the ongoing demand for AI-related technologies, have bolstered investor confidence, reflected in the significant rebound of US tech stocks on September 11.