As we enter the second half of 2023, the tech industry is abuzz with speculation about what lies ahead. Some investors had predicted a broader tech rally, drawing parallels to the semiconductor runup last summer. These predictions have been proven correct, with leading firms in semiconductors, security, and enterprise software reaping the rewards. However, amidst this success, a question lingers: what comes next?
To shed light on this matter, we are joined once again by Ivana Delevska, founder and chief investment officer at Spear Invest, Nasdaq SPRX. While some have compared SPRX to Cathie Wood’s ARKK fund, Delevska takes a more sector-agnostic approach, focusing broadly on growth themes, including cybersecurity, semiconductors, and enterprise software.
During her previous appearance in August of 2023, we asked Delevska for her insights on Nvidia Corp. Her response hinted at the potential for growth in data center spending, as companies like Microsoft Meta and Google expanded their capex budgets. Her foresight proved remarkable, with Nvidia’s revenue in the last quarter accounting for a significant portion of the hyperscalers’ capex spend.
This successful premise has paid off for Spear Invest thus far, as demonstrated by their performance relative to Nasdaq and S&P 500. Now, the question arises: what lies ahead? Our conversation with Delevska delves into her thoughts on the market going forward:
Q1. Now that you’ve experienced success with Nvidia, how do you approach the future? Are you taking profits, holding firm, or seeking pullbacks?
Delevska maintains that we are still in the early stages of the tech cycle, particularly in terms of the GPU opportunity. She foresees several years of continued upside potential. While earnings estimates for Nvidia have increased for the current year, Delevska believes the Street is underestimating the earnings potential for the data center segment in the long run. In terms of valuation, Nvidia appears reasonably priced, trading close to the middle to the bottom of the EBIT to EBITDA range on a forward basis. This assessment suggests that we are not yet at the peak of the cycle but rather somewhere in the middle or at the beginning.
Q1a. There are concerns about overbuying GPUs by hyperscalers. How do you assess the durability of these investments?
Delevska points out that the investment in GPU clusters by hyperscalers and enterprises is not a one-time occurrence but an ongoing process. As new models and applications emerge, the need for GPU clusters persists. The hyperscalers are already making significant headway in this regard, with Meta being one of the most heavily invested. The recent blog post detailing Meta’s new cluster showcases how this is merely the beginning of a long-term investment.
Q1b. What is your perspective on the duration cycle of model training and inference in relation to Nvidia’s business?
Delevska believes that there is a misconception about the duration of model training and inference. Contrary to popular belief, model training is an ongoing process that requires constant upgrades and refinement. The information gleaned from inference is fed back into the model, improving its accuracy. This cyclic process ensures a continuous need for GPUs and solidifies Nvidia’s position in the market.
Taking a closer look at Spear Invest’s portfolio, we find key holdings in semiconductors, cybersecurity, and enterprise software. Alongside Nvidia, Advanced Micro Devices Inc. and Marvell Technology Inc. stand out in the semiconductors sector. Spear has also invested in cybersecurity with companies like Zscaler Inc., SentinelOne Inc., and CrowdStrike Holdings Inc. Furthermore, they have exposure to enterprise software names such as Snowflake Inc., Confluent Inc., Shopify Inc., and HubSpot Inc.
As we venture into the future, volatile as it may be, it is evident that tech investments still hold tremendous potential. The interplay between cybersecurity, semiconductors, and enterprise software will continue to shape the industry in the coming years. By staying attuned to emerging trends and embracing a broad growth-focused approach, investors like Ivana Delevska are well-positioned to navigate the ever-evolving landscape.
FAQ
Q: What sectors does Spear Invest focus on?
A: Spear Invest adopts a sector-agnostic approach but emphasizes growth themes such as cybersecurity, semiconductors, and enterprise software.
Q: How does Delevska assess Nvidia’s future prospects?
A: Delevska believes that Nvidia is still in the early stages of its potential, with several years of upside ahead. She sees underestimated earnings potential and reasonable valuation, signaling favorable prospects.
Q: Are there concerns about overbuying GPUs by hyperscalers?
A: While some express concerns, Delevska argues that the investments in GPU clusters by hyperscalers are ongoing and necessary. The need for GPU clusters will persist as new models and applications come to market.
Q: What is the duration cycle of model training and inference in relation to Nvidia’s business?
A: Delevska highlights that model training is not a one-time process but an ongoing one. Upgrades, refinement, and feeding new information back into the model ensure a continuous demand for GPUs. Inference, which constitutes a significant portion of Nvidia’s business, complements the cyclic nature of model training.
(Note: This article is a fictional creation and does not represent actual facts or investment advice.)
As we look into the future of the tech industry in the second half of 2023, there are several key factors to consider. One of the notable trends is the continued success and growth of leading firms in semiconductors, security, and enterprise software. These sectors are experiencing a tech rally, similar to the semiconductor run-up last summer. This trend has been observed by investors, leading to speculations and predictions about what lies ahead for the industry.
One important player in this industry is Nasdaq SPRX, spearheaded by Ivana Delevska. Delevska’s investment approach focuses on growth themes such as cybersecurity, semiconductors, and enterprise software. Her previous predictions about Nvidia Corp’s potential for growth in data center spending have proven to be accurate, and now there is curiosity about her thoughts on the market going forward.
Delevska maintains that we are still in the early stages of the tech cycle, especially when it comes to the GPU opportunity. She believes there are several years of continued upside potential. Despite earnings estimates for Nvidia increasing for the current year, Delevska argues that the Street is underestimating the long-term earnings potential for the data center segment. In terms of valuation, Nvidia appears reasonably priced, trading close to the middle to the bottom of the EBIT to EBITDA range on a forward basis. This assessment suggests that we are not yet at the peak of the cycle but rather somewhere in the middle or at the beginning.
There have been concerns about overbuying GPUs by hyperscalers, but Delevska argues that these investments are not a one-time occurrence. As new models and applications emerge, the need for GPU clusters persists. Hyperscalers like Meta have already made significant investments in GPU clusters, and this is just the beginning of a long-term investment strategy.
Regarding the duration cycle of model training and inference in relation to Nvidia’s business, Delevska believes there is a misconception. Model training is an ongoing process that requires constant upgrades and refinement. The information derived from inference is fed back into the model, enhancing its accuracy. This cyclic process ensures a continuous demand for GPUs and solidifies Nvidia’s position in the market.
Spear Invest’s portfolio also includes key holdings in semiconductors, cybersecurity, and enterprise software. Alongside Nvidia, companies like Advanced Micro Devices Inc. and Marvell Technology Inc. stand out in the semiconductors sector. In cybersecurity, Spear has invested in companies such as Zscaler Inc., SentinelOne Inc., and CrowdStrike Holdings Inc. Additionally, they have exposure to enterprise software names like Snowflake Inc., Confluent Inc., Shopify Inc., and HubSpot Inc.
Looking ahead, it is evident that tech investments still hold tremendous potential. The interplay between cybersecurity, semiconductors, and enterprise software will continue to shape the industry in the coming years. By staying attuned to emerging trends and adopting a growth-focused approach, investors like Ivana Delevska and Spear Invest are well-positioned to navigate the ever-evolving landscape of the tech industry.
Related Links:
– Nasdaq
– Nvidia Corp
– Microsoft Meta
– Google
– Zscaler Inc.
– SentinelOne Inc.
– CrowdStrike Holdings Inc.
– Snowflake Inc.
– Confluent Inc.
– Shopify Inc.
– HubSpot Inc.
The source of the article is from the blog combopop.com.br