2023-12-01 06:05:22
Signals are multiplying on a recovery in PC and smartphone sales, or at least that the bottom of the cycle was at 4Q22 and 1H23.
After major purchases in 2020 and 2021 with the stay-at-home/work-at-home, individuals and businesses are beginning to upgrade operating systems with ever more powerful semiconductors, cloud and AI. Many PCs are unable to upgrade to Windows 11. It may still be a long way off, but Microsoft announced the end of Windows 8/10 operating system updates for October 2025. In October, the market global smartphone sales grew by 5% year-on-year, following 27 months of contraction, according to Counterpoint Research. Analysts expect this recovery to continue in the coming quarters. Growth is coming from emerging markets, particularly with Huawei in China with the new Mate 60 Pro and Apple’s new iPhone 15. The consultant Canalys also observed an improvement with a 1% decline in smartphone deliveries in 3Q compared to –10% in 2Q and increasing demand in emerging regions.
IDC Corp upgraded its semiconductor market forecast from Weak to Growth in 2024, considering the bottom of the cycle in mid-2023 with strong resilience in the US and accelerating demand in China in 2H24. Sales of PCs and smartphones are expected to accelerate and stocks to replenish. The electrification of vehicles will increase demand. After 8 consecutive quarters of decline in PC sales, Gartner Research expects the market to recover in 4Q23. It is also clear to Gartner that the recovery is here with a replenishment of reseller stocks.
Nvidia published results well above expectations. Demand is strong for its new GH200 GPU and H100 chips for gaming, data servers, cloud and AI. Net profit increased from $680 million in 3Q22 to $9.24 billion in 3Q23 and revenues from $5.9 billion to $18.1 billion. The share price weakened slightly on the one relatively negative announcement with the impact of US restrictions on exports to China; but Nvidia also said that these impacts will be largely offset by strong growth in other regions.
Our convictions for the coming months are: Nvidia with a price target of $690, Microsoft at $440, Meta at $400, Netflix at $600, Intel at $60, HP at $35 and Samsung Electronics at KWR 102,000 (Samsung Electronics listed in London SIDS LI at $1,570).
Heravest SA is an independent, top-down to bottom-up boutique investment advisory and investment solutions provider.
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