After some panic selling in recent days sparked notably by the absence of a Super Micro preannouncement, it looks like investor worries could start to ease following a set of strong quarterly figures and encouraging comments from Tesla, Vertiv and Texas Instruments.
One of the highlights in the Tesla report was the major ramp-up of AI training capacity in Q1 that more than doubled compared to Q4 to 35,000 equivalent H100 GPUs and $1 billion of quarterly spend on computing hardware. The ramp is far from over, as Tesla targets 85,000 GPUs by year-end.
Admittedly, Tesla has been increasingly relying on its self-developed AI chips and supercomputer called Dojo, for the training of its neural network with video data from the Tesla fleet, meaning that Nvidia will not fully benefit from the Tesla windfall. That said, the Tesla move suggests that the arms race is on for AI supremacy and that other Tech giants will keep investing massively in AI hardware to follow suit, notably as the supply environment has materially improved.
Vertiv, which provides cooling solutions for datacenters, confirmed this constructive view on AI spending, hinting at the acceleration of AI-driven demand and datacenter build schedules in 2025 and beyond. While the company modestly raised its FY revenue growth guidance to 12% from 10%, the company delivered a 60% order growth, far exceeding expectations and giving confidence in the upward revision momentum in both 2024 and 2025.
Finally, Texas Instruments reassured. While revenue remained largely down (-16% year-on-year), they came a bit ahead of expectations as did the Q2 guidance (+4% vs. Q1), as the company’s tough end markets (autos, industrials…) have started to stabilize or improve. Even if Texas Instruments is not a datacenter/AI player, the signs of bottoming out in two large semiconductor end markets are a positive for many semi companies that could benefit from both the strength of datacenters and the recovery of industrials and autos.
Overall, this is an encouraging set-up from semiconductors. Earnings from cloud giants (Meta, Microsoft, Google) will bring additional color on upcoming hardware spending and will also set the tone for the software ecosystem.
