How long can chip makers keep the AI hype afloat?

Recovering chipmakers like Nvidia (NVDA) are leading the charge in the tech-heavy Nasdaq Composite (^IXIC), which surged by over 2.6% in Wednesday's session as companies like Meta Platforms (META) revealed ongoing CapEx (capital expenditures) investments into AI infrastructure in its earnings.

Moor Insights & Strategy Founder, CEO, and chief analyst Patrick Moorhead joins Asking For A Trade to give insight into the tech sector, the AI trade, and what it means for Big Tech moving forward into the earnings season.

Moorhead reiterates his thought from a previous interview: "I really laid out a thesis that says the infrastructure build-out is going to continue for at least another year and maybe 18 months, and that's driven primarily by the downstream FOMO, or the fear of missing out, from those enterprise SaaS providers. Meta, who clearly showed that they're investing hardcore because they have to. If you are not investing in your competitors, you could be set back potentially a decade here.

Moorhead is also looking at the long-term valuations of AI-adjacent software companies and chip designers like ServiceNow (NOW), Salesforce (CRM), Qualcomm (QCOM), and Arm Holdings (ARM)

He ends with his thoughts that Nvidia (NVDA) has "at least another 12 months to run. We saw TSMC (TSM), where Nvidia does all of their manufacturing, they're basically sold out through 2025 and into 2026. We just heard from Microsoft (MSFT) and Meta that that they're putting the pedal to the metal on this. And all of this is goodness for Nvidia."

For more expert insight and the latest market action, click here to watch this full episode of Asking for a Trend.

This post was written by Nicholas Jacobino

Video transcript

Well, recently, as major chip makers like NVIDIA have gone.

So has the NASDAQ today is no different semiconductors leading the exchanges surge?

Joining us now with Morris Patrick Moorhead, more insight strategy founder, Ceo and chief analyst Patrick, you know, so now we've gotten a bunch of these companies to report.

You just heard the conversation with Dan Halley, where, what have we learned about where we are in this A I build out cycle?

Yeah.

So first and foremost, uh you have the infrastructure providers that includes the chip companies, but also the infrastructure as a service providers and, and the names behind them.

People are looking for any, any hiccup that's out there because the gains have been so big in names like NVIDIA and A MD and, and Broadcom.

They're looking for anything that might uh portend to the downturn.

And then another uh you know, positive uh uh data point comes out and everybody just jumps back on the train uh last week.

Uh I was on one of your shows and I really laid out a thesis that says the infrastructure build out is going to continue uh for at least another year.

And maybe 18 months.

And that's driven primarily by the downstream FOMO or the fear of missing out from those enterprise SASS providers uh meta who clearly showed that they're investing uh hardcore uh because they, they have to, if, if you are not investing in your competitors are, you could be set back potentially a, a decade here.

Now, in the long run, of course, the downstream value has to be there.

And I am looking to the enterprise um soft enterprise software makers, uh names like service now and, and SAP and sales force.

Uh And I'm also looking at the, the second tier of what I call A I infrastructure, which we discussed a little in relation to Qualcomm and, and arm even printed today is the smartphone and uh A I PC boom that I believe is coming up shortly.

Um And you know, when you talk about some of those service now and, and some of the other enterprise software companies, what are the early indications of that Roy that they're getting?

Yeah, so the early indications when the companies actually will directly talk about it because not everybody is that, for instance, Adobe isn't being very clear on, on it, I believe service now is in sales forces as well.

And even Saps Christian Klein uh did the drill down with customers who are implementing, they are seeing some pretty staggeringly impressive results like 50% improvement in productivity, uh 20% increase in the amount of stickiness and revenue that they can drive with certain customers online.

The challenge now is to get more people doing more, getting them beyond these uh uh po CS or trials and rolling it out to the masses.

Uh We know that enterprises are typically slower than, let's say uh consumers.

And, and then the other side of that is coos you brought up Apple, right, with what we've seen and what they're bringing out with Apple A I and uh that in itself could, could drive a massive run in everything related to A I and on the, the uh Qualcomm uh discussion that I actually had Cristiano Amman, the Ceo of Qualcomm today.

He really talked about the next generation of A I smartphones uh for instance, putting in this new or CPU that boosts performance, boost A I performance.

So it's happening.

Uh I am seeing indicators that the downstream effects are going to be there, but we do need to see acceleration over the next six months or I think people are going to get very edgy.

Again.

It's interesting to hear you talk about the likes of service now talking about the effects this is having on productivity because then you hear this upwork study that showed the people who are using this stuff in their work, they don't like it, they feel it's not making them more productive and then, and then they're having to correct mistakes and I wonder what the risk is, is that there is gonna be this bias on the part of the S enterprises I've made this huge investment.

I have to make it work even if it's not working.

I, is that a risk here?

I think it's always a risk with, with new technology.

I mean, if we looked at P CS, we looked at smartphones, we looked at enterprise a software.

It, it does take a while and there have been some, some fits and starts.

Uh the tech industry and enterprises have this amazing, amazing uh coalescing uh capability because you have uh very motivated parties to make this work.

And the great part of an enterprise sass companies is they can make very quick changes uh to all this, what the biggest thing that's taken so much time here has been getting the data estates uh in, in line because unlike any other big tech thing we've seen and even though garbage in garbage out and the data has always mattered, it matters even more with generative A I, the upside is there for the productivity but also the downside and risk from a security and complexity and privacy uh point of view.

But I have confidence that in the next six months, the industry will be in a very good place.

Downstream Patrick, I wanna circle back to where we began and that's what the chips because I got to ask you about NVIDIA.

As Josh likes to joke, we're contractually obligated in every conversation to mention NVIDIA, not really, but it feels like it.

Um And obviously it saw a big surge today on that uh the catalyst of that note from Morgan Stanley.

Um We have to wait until the end of August to get those numbers.

Do you think once again that the highest estimates will be blown away?

Listen, I'm sticking to my guns here and that is that uh NVIDIA has at least another 12 months uh uh to run.

Uh We saw TS MC where NVIDIA does all of their manufacturing.

They're basically sold out through 2025 and it 2026 we just heard from Microsoft and Meta that, that they're putting the pedal to the metal on this and all of this is goodness for NVIDIA and by the way, it's good for, for a MD and it's good for uh Broadcom and Marvell as well.

Patrick.

Always great to see you.

Thanks a lot.

Appreciate it.

Thanks.