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The Companies Set to Guide the Tech Future
Tech giants Nvidia, Microsoft and Intel are positioned to be the spine of the global technology sector in the new year. All three have battled with worldwide chip shortages and supply chain issues in 2021, but, at the same time, all three are assuming a pro-active approach to 2022, making plans to extend their dominance over key areas of the tech industry. Trends with strong growth potential like the metaverse and videogaming are key on the companies’ agendas, and they have no plans to play supporting roles. For those engaged in online trading of CFDs of these tech pioneers, let’s review each one in its turn and try to gauge its trajectory for 2022.
Nvidia started off in the niche of video games graphics and is now the most highly valued maker of semiconductors available for public trading. Nvidia chips are used for Artificial Intelligence technology, crypto mining and other fast-growing areas of tech. In November 2021, after reporting a very strong third quarter to the year, Nvidia’s stock shot up by 11% in one day. Their fiscal fourth quarter revenue broke through expected limits to reach $7.4 billion and company shares climbed to $327.07. One of their best-performing segments was that of server processors, which reported revenue increases of 55% in Q3. Sales to automakers were weaker, but these had suffered due to supply shortages. Overall, though, “It’s hard to imagine things going smoother for NVDIA at the moment”, analysts at Bernstein reported. Their average quarterly revenue growth was 57% for the previous eight quarters.
In September 2020, Nvidia revealed its plans to buy Arm Ltd. for $40 billion. Arm runs some of the technology needed in smartphones and data centers but doesn’t compete in these markets. Rather, it licences its technology to hundreds of other companies who need it for their own production. However, in December 2021, just after a year had passed, the US Federal Trade Commission (FTC) made a move to stop the purchase, citing a threat to innovation in the semiconductor industry. “We have said for some time that it is unlikely this deal gets approved”, commented Matt Bryson of Wedbush Securities. Still, Nvidia stock remained as popular as ever in the last month of the year, rising 2.2% in value to $321.26.
Also in December, Pat Gelsinger, CEO of Intel, announced he was going build new manufacturing plants in Italy, France and Germany. Just the test assembly factory in Italy would cost about $10 billion. Gelsinger’s moves were part of his strategy to re-establish some of Intel’s dominance after the company lost considerable market share to rival Advanced Micro Devices Inc. in 2021. In addition, after an October earnings report, when Intel warned that its profitability might be muted for the next few years, company stock sunk. 2021 was, in general a weak year for Intel stock, which only appreciated by 2.3% until December, compared with, say, the Philadelphia Stock Exchange Semiconductor Index which leaped up 39%. The expensive plans in December were a bold step on the CEO’s part to bolster chip manufacturing in Europe, challenging Asia’s sovereignty in this regard. Intel shares responded by rising 1.2%.
Mobileye, the autonomous driving company owned by Intel, is planning an Initial Public Offering (IPO) in mid-2022. Morgan Stanley’s response to the December news was to declare it “Significantly positive”, and Intel shares rose 7.9% after their so-so year. Mobileye, which makes the software and chips that self-driving cars need to function, was purchased by Intel in 2017 for $15 billion.
In the third quarter of last year, Microsoft’s cloud segment earned its status as the company’s most important, pushing Microsoft’s market capitalization over $2 trillion. PCs were not available in quantities that met demand in 2021, and Microsoft’s gaming segment was particularly hit by the chip shortage, with supplies of Xbox Series X and S running low. The news in January this year was that Microsoft was planning to pay out a gigantic $68.7 billion for videogame company Activision Blizzard. Microsoft CEO Satya Nadella feels that “Gaming is the most dynamic and exciting category in entertainment across all platforms today” and intends to give gamers Tencent and Sony a run for their money this year.
Online Trading in the Year Ahead
Top tech companies like Microsoft, Nvidia and Intel are gaining more than their share of headlines lately, which translates to market volatility in both directions, thus providing opportunities and risks for those engaged in online trading of CFDs. Traders should be keeping up with all the news to do with regulatory action surrounding big tech company acquisitions, new product launches, and any developments in the ongoing global chip scarcity in order to make more informed trading decisions.