The topic of artificial intelligence (AI) is omnipresent. Scientists discuss the possibilities of this field of technology just as much as politicians, entrepreneurs and investors. ChatGPT is at the center of the debates. The generatively pre-trained (GPT) language model was developed by OpenAI, a subsidiary of the US technology giant Microsoft. New applications are constantly being introduced - ChatGPT delivers analyses and essays, simulates human interaction or writes poems and songs. Despite all the criticism - among other things, there are warnings of a loss of control - generative AI is increasingly turning out to be a branch of industry with enormous growth opportunities. The potential profiteers include not only the developers of the corresponding software. The use of ChatGPT and comparable applications requires the processing of enormous amounts of data. The mainframe computers used for this purpose contain ultra-modern and super-fast semiconductors.
Shortly before Whitsun, two chip manufacturers made people sit up and take notice with offensive forecasts for the AI business. Nvidia announced sales of around USD 11 billion for the current quarter - about 50% more than analysts had previously expected. According to its own statements, the US company now prefers to sell complete AI supercomputers instead of individual semiconductors. The Nvidia share reacted to the interim report with a price jump of up to 29%. Marvell Technology, which is also listed on the Nasdaq, even rose by almost 42% within two days. Initially, this share benefited from the Nvidia news. The next day, Marvell itself took the floor. With the sales for the first quarter of the fiscal period 2024 (as of the end of January 2024), the chip manufacturer was able to just exceed expectations. The real "hammer" here was also the outlook: CEO Matt Murphy expects revenues in the AI segment to double this year. "Generative AI is rapidly driving new applications and changing the investment priorities of cloud customers," the top executive said.
In 2024, the boom is expected to continue. Murphy expects Marvell Technology's AI revenues to at least double again then "and continue to grow strongly in the years ahead." For the current second quarter, the CEO is forecasting a one-tenth year-over-year revenue increase in the cloud segment. Marvell has assigned the business for semiconductor solutions used in the "data cloud" to the "Data Center" division. Consequently, this segment also includes the AI solutions of the technology company based in the US state of Delaware. In fiscal year 2023, the segment contributed 41% of total revenue. In total, the group is active in five end markets (see chart). Marvell's components can be found in corporate networks, broadband infrastructure, game consoles and autonomous driving cars.
Despite all the euphoria: After the recent price advances, the Marvell Technology share looks quite overbought. In this respect, a consolidation could now be imminent. In such a scenario, the new Softcallable Barrier Reverse Convertible (BRC) would offer an interesting investment alternative. As issuer of the CHF-denominated structured product, Leonteq guarantees a quarterly coupon payment of 9.00% p.a.. Those who wish to allocate the capital in USD can even expect a 300 basis points higher payout extrapolated over the year. Regardless of the value date of the BRC, Marvell enters the twelve-month term with a barrier of 55% of the initial fixing. As long as the underlying does not fall to or below this level, investors will receive the nominal amount in full at maturity. If this calculation does not work out, the partial protection expires. The same principle applies to another BRC. Here Marvell comes together with the industry giant Intel. The CHF-denominated multi-product pays a coupon of 13% p.a., while the barrier is 55% of the starting prices. Leonteq may call each of the featured BRCs at specified dates. If the issuer makes use of the soft callable feature, the respective product, with accrued coupon, will be redeemed early.
We look forward to answering all of your questions about our products and how they are traded. Please don't hesitate to get in touch! Phone: 058 800 11 11, email info@leonteq.com or contact us here.