Dave Vellante's Breaking Analysis: The complete collection
Episode 220 - Navigating NVIDIA & the AI Trade: Sell, hold or double down?
Heading into the second half of 2023, some investors felt that the semiconductor run up last summer was a harbinger for a broader tech rally. That thesis proved prescient and rewarded managers who took on risk at the time with leading firms in semiconductors, security and enterprise software. The question is, where do we go from here? In this Breaking Analysis, we welcome back Ivana Delevska, the founder and chief investment officer at Spear Invest. Some have compared SPRX to a miniature version of Cathie Wood's ARKK fund. However, SPRX is more sector agnostic while Delevska focuses more broadly on growth themes such as her current emphasis on cybersecurity, semiconductors, and enterprise software.
Episode 219 - Why CrowdStrike is separating from the cybersecurity pack
It's been an interesting month in the cybersecurity space. The sector has been somewhat less affected by budget tightening these past twenty-four months and at the same time has benefitted from AI tailwinds. But in the past several weeks, we've seen some separation in key high-flying cybersecurity names. Specifically, Palo Alto shocked the street last month with a $600M billings forecast surprise and sounded the alarm that there were cracks in its consolidation execution. This dragged down other consolidation players in sympathy, namely CrowdStrike and Zscaler. But our research shows that the dynamics facing these three companies are quite different. Of particular note, CrowdStrike's earnings print highlights the company's impressive momentum while recent negativity around Zscaler is a bit of a head scratcher for us, which we'll try to explain. In this Breaking Analysis, we take a more narrow look at the information security space and dig deeper into CrowdStrike's continued success. With recent survey data from ETR, we advance our premise that platforms beat products and identify several levers that are powering CrowdStrike's path to $5B by FY 2026 and to $10B by the end of the decade.
Episode 218 - The unplanned genius of Broadcom's route to AI dominance
Broadcom is perhaps the most unique company in the technology business. It doesn't simply chase markets that are on steep growth curves and can deliver short-term ROI. Rather, it goes after established markets with durable franchises. Broadcom focuses its R&D on serving customers in these markets with major engineering investments to achieve a dominant position in each of its target sectors. And sometimes, the company lucks out with this strategy and catches a wave accidentally by design. In this Breaking Analysis, we extract key nuggets from our sit-down at MWC this week with Charlie Kawwas, president of Broadcom's Semiconductor Solutions Group, and we unpack the contrarian business technology model of Broadcom.
Episode 217 - Cloud optimization wanes as AI slowly lifts off
The past twenty-four months have seen cloud spending face dual headwinds of macroeconomics and the ability to dial down resources as needed - i.e., cloud optimization. Nonetheless, the big four hyperscalers clocked in between $170 - $190B in IaaS and PaaS revenue last year, depending on how you factor the leaked court documents suggesting Azure is much smaller than previously believed. Regardless, hyperscaler growth continued to outpace almost all markets, accelerating between 18-19% in revenue terms last year, despite their enormous size. As we progress into 2024, IT decision-makers are cautiously optimistic about spending levels, especially for the second half. All hyperscalers report that cloud optimization is slowing, although pockets of cloud cost-cutting remain. While AI gets all the headlines, its contribution to revenue is still a small fraction of the overall spending pie. For example, we estimate that Microsoft's AI services accounted for around $800M this past quarter. But the trajectory for AI services and the potential uplift looks promising for all four hyperscalers. We think collectively the generative AI uplift in cloud will surpass $10B this year. In this Breaking Analysis, we update you on our latest hyperscale cloud spending and market share data, analyze the ETR survey data on cloud optimization, assess the Gen AI updraft for the big three US cloud players, and look at some of the industry trend data on cloud spend by platform.
Episode 216 - Intel Foundry is a bold bet filled with uncertainty
As an American, you can't help but root for Intel CEO Pat Gelsinger to succeed. His vision to bring semiconductor manufacturing leadership back to the United States is more than just a quaint nationalistic sentiment. It's a strategic imperative for the country, its military, global competitiveness, and access to future technological innovations in the AI era. But his strategy is dependent upon the success of Intel both as a designer and a leading manufacturer of advanced chips. Such a choice puts Intel in a multi-front war with highly capable leaders in several markets, including names like AMD, NVIDIA, AWS, Google, Microsoft, Apple, Tesla, and other chip designers...even perhaps OpenAI. Intel also competes with established manufacturers like Taiwan Semiconductor and Samsung. Moreover, Intel's business model has been disrupted by Arm, which has created a volume standard powered by the iPhone and mobile technologies. Finally, China, Inc. looms as a long-term competitor further underscoring the imperative. But the trillion-dollar questions are: 1) What are the odds that Intel's strategy succeeds; and 2) Are there more viable alternative strategies for both Intel and the United States? In this Breaking Analysis, we dig into the stakes and odds of Intel's foundry strategy.