As artificial intelligence (AI) stocks dominated the latest earnings season with an emphasis on high-performance computing, high-bandwidth memory, and advanced nodes/packaging, the team at DBS Group Research sees that AI-driven sectors are “leading the charge”.
“[This is] notably evidenced by robust performance in the data centre and networking segments,” says the team in a March 20 note.
“Capital expenditure and revenue for the data centre segment are projected to substantially surpass that of other segments,” it adds.
Despite seeing a 0.7% drop on a m-o-m basis in semiconductor shipments in January, the team sees that the sector remains on an upward trajectory with a 15.2% y-o-y increase. The slight decline in January was attributed to a “post-holiday dip”.
To this end, it notes that tech research and consulting firm Gartner has kept its projections unchanged with the semiconductor sector seeing an 18.2% y-o-y growth in 2024 and an additional 14.0% y-o-y growth in 2025.
However, it sees that the recovery path ahead may be uneven in the consumer electronics space such as personal computers (PCs) and smartphones. The industrial segment, which remained “relatively resilient” in the correction in 2023 is also experiencing delayed effects from the inventory correction. Plus, China continues to pose a “significant challenge” to the pace of recovery overall.
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Among the AI counters, the team has named Nasdaq-listed Nvidia as the “undisputed leader” in AI chips. As at 10.44pm, shares in Nvidia have surged by a remarkable 99.63% or US$479.90 ($645.66) to US$961.58. Fellow Nasdaq-listed counter, Advanced Micro Devices (AMD) was named as Nvidia’s nearest competitor.
Applied Materials (AMAT), which is one of the key customers of Singapore Exchange S68 (SGX)-listed stocks Frencken and UMS, is the “leader in advanced equipment” while TSMC is the “only foundry that can mass produce 3mm chips”. Micron was named as a “pure memory play”.
In Singapore, UMS was identified as one of DBS’s picks with its key customers in the AI-related space. Thanks to its recent foray into the data centre ecosystem, Venture Corporation V03 was also named to ride the AI wave.
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Rising iPhone assembler, Hong Kong-listed BYD Electronic, was also named as it aims to capitalise on the upgrades of AI-powered phones.
Shares in UMS and Venture closed at $1.34 and $14.18 respectively on March 25.
