Esperio: Nvidia and Intel Further Sources for the Tech Rally

The Nasdaq 100 has a clear potential to surpass the 15,000 mark.

Just as the official launch of Tesla's German gigafactory immediately hiked its share price by almost 10%, now Nvidia and Intel are following this path on announced production plans. Nvidia gained 9.82% while Intel jumped 6.94% on Thursday, after Jensen Huang, the chief executive of Nvidia, let it slip that his company would be interested in using Intel's industrial facilities to source more of Nvidia's designed chips.

Experts on Wall Street are sceptical, as they suggest Nvidia is unlikely to risk its competitive edge by allowing its rival to approach engineering. “I'm sure he's [Huang] interested in having more options ... and it doesn't cost him anything to say that. But it doesn't tell you anything at all about what it's actually going to look like when they get there,” said Stacy Rasgon, an analyst at Bernstein. “We see little likelihood that NVDA would choose to fab prominent products at arguably its most significant competitor's facilities, a choice that would provide Intel with an early look at NVDA's future chip design,” Wedbush wrote in a note.

However, Mr Jensen Huang said that “Intel has known our secrets for years” after Nvidia has been partnering with many companies including Intel for a long time, and so “trusting and working with industry partners is key”.

“They're interested in us using their foundries. We're very interested in exploring it,” Huang said on a call with reporters on Wednesday. Yet, he also added the foundry discussions may take a longer time as it's all about integrating supply chains. In 2021, Intel, which did not see much success in selling more of its own chips, decided to diversify its business by also producing chips that other companies design. They called this branch the foundry business, announcing some multi-billion-dollar projects both in the United States and Europe. Esperio considers that Nvidia does not want to miss this golden opportunity to widen the scope of its global expansion.

Taiwan Semiconductor Manufacturing Co (TSMC) builds most of Nvidia's chips and “being a foundry at the calibre of a TSMC is not for the faint of heart,” Huang remarked also saying that it may require “a change in culture” for any producer “to provide not just processes but service”. As his words apply to both Nvidia and Intel cooperation, they may also influence the general public who is calling the shots where this pair is concerned. Intel CEO Pat Gelsinger just commented for Reuters that his company is “thrilled for their interest in using our foundry capabilities”, while adding that he had “no particular timeline” but Intel had ongoing discussions with Nvidia.

Curiously, all this happened a few hours after a television personality and an anchor on Squawk on the Street, which headquartered live on the floor of the New York Stock Exchange, Jim Cramer, urged investors to add Nvidia stocks to their investment portfolios and to keep watching for chances to buy any dips. “I think Nvidia owns the future. Thats why I still love the stock long-term, and I view any weakness as a chance to buy more gradually on the way down,” the CNBC's “Mad Money” host said on Wednesday.

It seems as if he could be correct in many aspects of his forecast, except for the nuance that a technical pattern resembling a double or triple bottom on daily and weekly charts for Nvidia hardly implies high chances of a remarkable decline in quotes below the breakout line (see the picture below).

Alex Boltyan, senior analyst of Esperio company