Are Chipmakers Facing a Downturn in AI Spending?
In a recent segment on CNBC, Jim Cramer debunked the notion that large-scale spending on artificial intelligence (AI) has peaked. He argues that AI infrastructure remains a compelling investment opportunity, despite some on Wall Street adopting a negative narrative.
Cramer highlights Nvidia and Broadcom as two key players in the AI space. While their recent earnings beat estimates, their shares fell as investors perceived their performance as underwhelming. Cramer attributes Nvidia’s gross margin decline to supply chain issues for its new AI chip, Blackwell, rather than a decline in demand for AI technology.
Using a Google versus Bing analogy, Cramer emphasizes the importance of staying ahead in AI development. He notes that Microsoft’s lack of investment in search technology gave Alphabet a competitive advantage. Likewise, hyperscalers like Meta rely on companies like Nvidia and Broadcom to power cutting-edge AI programs.
Cramer reassures investors that the recent underperformance of AI stocks is not indicative of an AI bubble. Instead, it reflects intense demand and supply chain challenges. As companies continue to innovate in accelerated computing and AI, he believes that the market will rebound.
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