By Nicki Bourlioufas

Nvidia has overtaken Nvidia has overtaken Alphabet and Amazon in market value this week to become the 3th largest company in the US, and looks set to take on Apple for second place, a huge milestone in a rally fuelled by soaring demand for its GPUs, holding the greatest market share in AI computing.

Quite the Valentine’ day present for me, a Nvidia shareholder, who, as a single women, likes the boost. It might not be a bunch of red roses, but along with my other investments in AMD, Broadcom, and ASML, it’s not a bad bunch!

You can see the ranking of the largest US companies here, and Nvidia this week became the fourth largest company in the US, moving closer to the world’s biggest company Microsoft, and Apple, followed by Alphabet.

Lesser known US chip and software infrastructure company Broadcom entered the Top 10 US companies this year and looks set to overtake Tesla this month too.

My bet is that will continue Nvidia will close in on Apple and Microsoft and could become the second largest company in the US and the world after overtaking Amazon and Alphabet in 2024, Tesla and Berkshire Hathaway in 2023 and Meta in 2022.

Staying with the momentum

The momentum is with Nvidia and other chip companies such as AMD, Broadcom, ASML (now Europe’s largest tech company) and ASMI International, also soaring higher, and they are likely to keep on going this year and well beyond, building their revenues and shareholder wealth.

The flow of money into computer chip companies and their suppliers is fundamentally changing capital allocation in the world’s largest economy and that is likely to continue. We need computer chips such as high tech GPUs like never before. Which is why the US government is throwing billions in R&D to support the semiconductor sector and making sure through trade restrictions on Nvidia that the Chinese can’t get its GPU technology.

And it’s not just momentum. Geopolitical factors alone point to the ongoing dominance of these companies. Nvidia’s market share and that of other US chip producers and equipment suppliers is being protected by US and European regulators who are determined to keep the latest chip technology out of China.

Some experts are still calling an end to the US tech rally, linking the outcome to the US interest rate outlook, which is very short sighted indeed.

Short and long term factors underpin the momentum behind chip companies. Generative AI is only part of the story; the demand rising for advanced computer chips that can process computer applications will endure for the long term and still represents a huge growth opportunity for Nvidia and others.

This century’s oil

Computer chips too are the ‘oil’ of the 21st century. The world will need ever increasing numbers of computer chips and faster ones as we move into an increasingly digital world, much like the world needed oil last century to drive industrialisation. Now we need chips to drive computer applications, not just AI functions but all digital processes.

Momentum too is forcing everything up. February has seen fresh records for the US share market.

And it’s not just momentum. Moore’s Law too tells us that computer chips are constantly evolving, so new products is always being launched to improve the productivity of chips in what is the world’s most complex manufacturing process.

Even better, Nvidia’s market share and that of other US chip producers and equipment suppliers is being protected by US and European regulators who are determined to keep the latest chip technology out of China.

And while AI has brought Nvidia and GPUs to the spotlight, GPUs have been important for a long time. While I drew a comparison between computer chips and oil, I admit that’s crude, given oil is a commodity and computer chips are the product of the world’s most complex manufacturing process.

The initial drawcard to Nvidia

What brought me to Nvidia in the first place?

Good spin I spun for a client, and the logic that computer chips bring us and represent.

Back in 2021, I pitched the potential benefits of investing in Nvidia on behalf of global asset manager VanEck, which held Nvidia as the largest stock in its video gaming fund ESPO, followed by AMD. I was so convinced by my own spin that I bought both up.

That spin was right on the money.

The story I pitched to business reporters and editors around the world at Bloomberg, Reuters, Yahoo, the AFR, the SMH, The WSJ, The Australian, was that if investors wanted to diversify out of the FAANG stocks, Nvidia was a good bet. The company would potentially grow more quickly than the FAANGs in the years to come, given its importance as a key producer of graphics processing units (GPUs). Demand for GPUs was racing ahead in 2020-21 with pandemic-heightened gaming and the surge in crypto mining. It still is with AI.

But back in 2021, no journalist or editor wanted to know or asked any questions when I pitched on Nvidia’s benefits as a great investment set to overtake the FAANGs, such was the focus on Bitcoin and other crypto assets. No one in the media wanted to know about GPUs or knew what they were, unless they were a gamer.

But I bought up. I invested in Nvidia at less than US$200/share in 2022, and I bought AMD on dips when it fell below US$100 in 2023 and in 2022, convinced that both companies would fly. I bought Microsoft, Apple and Alphabet shares early last year.

Another chip supplier to Nvidia and AMD, and Dutch born chip equipment supplier, ASM International, has gained tenfold in five years. And the next five? I’ve put money on its continued run, being a market leader in the technology used to create logic and memory chips; what’s to stop the momentum?

That’s an even more logical question to ask rather than how interest rates will affect long-term demand for chip producers and their suppliers, as many experts have done.

Want help to spot and tell a good story? Contact Nicki Bourlioufas on +61 411 786 933 or email at nicki@spotoncpr.com

By Nicki Bourlioufas

A recent article by Wall Street Journal columnist James Mackintosh declared “How I, and everyone else, got 2023 so wrong.”

“My biggest error in 2023 was the same as everyone else’s: being in the consensus that the fastest rate hikes in 40 years would cause a recession. They didn’t.”

Mr Mackintosh got it wrong again when he grouped himself with everyone else on December 29. He judged all investors by his lack of insight and assumed we all made the same mistakes as he did last year. We didn’t.

I, and millions of other investors, got 2023 right. That’s why the prices of US share soared, on soaring demand. My US share investments, dominated as they were by chip companies Nvidia, AMD and ASML, climbed to the clouds. And they are still soaring to new heights.

As Nvidia and AMD hit fresh records towards US$700 and US$200, respectively, this month, investors in these companies are on a high too. And the momentum is with them.

Strong underlying demand, not just hot air.

I expect the chip-led rally in US share markets to continue through 2024 so I’m hanging on for more records. Lookout for other chip companies like Broadcom that recently became the 10th largest company in the US.

Some experts are still calling an end to the US tech rally, linking the outcome to the US interest rate outlook.

I’m not backing that view, once again captured in this recent WSJ headline on 21 January. “Stocks Are at Record Highs, but Things Will Only Get Harder From Here.”

Really? A confident prediction made ahead of the US tech companies reporting their earnings – and entirely incorrect.

Much like Mr Mackintosh’s warning to investors in December to steer clear: “Things can always work out but, with U.S. stocks so expensive already, the odds aren’t good.”

The reality?

Momentum is forcing everything up. February has started with fresh records for the US share market.

Short and long term factors underpin this lift. Generative AI is here to for the long term and still represents a huge growth opportunity for Nvidia and others for the long-term.

As many experts have done, not just Mr Mackintosh, judging the outlook for computer chips and tech shares generally by yields on 10-year bonds is like trying to fly a glider plane at night. Impossible. Bond yields are a measure of the probabilities, about economic growth and inflation in 10 years’ time. They are not relevant to the underlying demand for computer chips now or in the future; that demand is underpinned by a longer-term need for faster computer processing power.

As for the short-term outlook for rates, it’s even less relevant.

That reflects an important fact. Computer chip companies are fundamentally changing capital allocation in the world’s largest economy and they are likely to continue doing so in 2024 and beyond. We need semiconductors them like never before.

You may have heard the analogy that computer chips are the ‘oil’ of the 21st century. The world needs more and more computer chips as we move into an increasingly digital world, much like the world needed oil last century to drive industrialisation. Now we need chips to drive computer applications, not just AI functions but all digital processes.

Reflecting that, Nvidia became the fifth largest company in the US last year and fellow chip and software company Broadcom this month became the tenth largest company in the US.  Like Nvidia two years ago, no one has ever heard of it, other than gamers and tech heads. Well, that’s changing.

AMD is likely to likely to move into the Top 20.

So, for all those experts who see Nvidia as crashing, and US tech shares generally, I’m staying long.

It’s not just about interest rates

Interest rates are very important. I know that I reported on the yield curve for many years for Dow Jones Newswires. There is no more important economic variable.

Yet some experts and commentators are so focused on talking about interest rates and ‘soft’ and ‘hard,’ landings, repeating the rhetoric over and again, that can’t see the wood for the trees.  (An aside here, we need new adjectives, please; there are many synonyms for ‘soft’ and ‘hard).

An alternative view is that of Steve Eisman of the ‘Big Short’ fame, known for betting against US subprime mortgages. He said last week that he’s feeling ‘blissful’ about the outlook for US stocks and going long.  I’m feeling blissful too, and staying long.

Irrespective of whatever happens to interest rates and global growth in 2024, the semiconductor sector is growing. The logic is clear enough: to become more productive, the world will need ever more computer chips, so it needs more investment in that space to power digital processes. It’s common sense.

Microsoft becomes Number One, Nvidia follows

Apart from anything else, momentum is driving these stocks up. It’s a significant factor driving US equity markets, a factor that many ‘experts’ didn’t account for in 2023. Momentum is a sentiment-based factor; put simply, strong past returns are associated with strong future returns. Some asset managers pay mathematicians a lot of money to predict momentum, and for good reason.  It can be a very reasonable predictor of equity prices in the future. I’m applying it to 2024.

But it’s not just momentum. Moore’s Law too tells us that computer chips are constantly evolving, so new products is always being launched to improve the productivity of chips in what is the world’s most complex manufacturing process.

Even better, Nvidia’s market share and that of other US chip producers and equipment suppliers is being protected by US and European regulators who were determined to keep the latest chip technology out of China. Geopolitical factors alone point to the ongoing dominance of these companies.

Now, with Nvidia trading near an all-time over US$660/share, and AMD also striking record highs at around US$180 as it heads towards US$200/share, up from US$100 in November 2023, I’m hanging on.

The initial drawcard

What brought me to these stocks in the first place?

Good spin I spun for a client, unpinned by logic.

Back in 2021, I pitched the potential benefits of investing in Nvidia on behalf of a client, a global asset manager VanEck, which held the stock as the largest holding in its video gaming fund, followed by AMD. I was so convinced by the spin I spun for this client on both companies that I myself bought both up.

The story I pitched to reporters and editors was that if investors wanted to diversify out of the FAANG stocks, Nvidia was a good bet. The company would potentially grow more quickly than the FAANGs in the years to come, given its importance as a key producer of graphics processing units (GPUs). Demand for GPUs was racing ahead in 2020-21 with pandemic-heightened gaming and the surge in crypto mining. No one to whom I pitched wanted to know, such was the focus on crypto assets in late 2021, but I was convinced.

So, I bought into Nvidia at less than US$200/share in 2022, and I bought AMD on dips when it fell below US$100 in 2023 and in 2022, convinced that both companies had a long way to fly.

As I told the WSJ in this article in early 2023, I’d buy other US tech stocks on dips to share in their profits. “As soon as there’s any hint that interest rates will be cut, then I expect tech stocks will rally and I’d like to be there and positioned. I use their products and I’d like to also reap their profits.”

Notably, chip companies’ market caps aren’t just ballooning in the US. Over in the Netherlands, ASML is now Europe’s largest technology company and its shares shot to a record.  Another chip supplier to Nvidia and AMD and others, ASM International, has gained almost as much as Nivida over the past five years. And the next five? The company is a market leader in the technology used to create logic and memory chips; what’s going to stop its run?

That’s a even more logical question to ask rather than how interest rates will affect the outlook for chip producers and their suppliers.

Last week, Microsoft became the world’s largest company, overtaking Apple, as it’s more closely linked to AI than Apple, focused as it is on smartphones.  Apple has significantly underperformed the Magnificent Seven over the past year. My bet is that will continue and Apple will keep falling down the list of the 10 largest companies in the US over this year or two with Nvidia catching up to Apple and potentially overtaking Amazon in 2024, after overtaking Tesla and Berkshire Hathaway in 2023 and Meta in 2022.

My track record isn’t bad either. I’m not being driven by greed but the desire to build and preserve wealth. I don’t hang on if it gets too risky.

Selling out before the GFC

Unlike most fund managers, I sold all my stocks in the month leading up to the GFC and put all my profits onto my mortgage. With banks going under and the US Fed adopting emergency rate cuts, I’d sold out all by shares by June 2008 before October’s crash. I was a business editor for News Corp at the time, reporting so much bad news that, for me, the writing was on the wall.

So, while most active fund managers hung on hard, betting on ongoing momentum, even as bad news emerged, I got out of equity amrkets while many of the ‘expert’ investors hung on, eventually losing billions of pension investors’ savings.

This time, it’s the other way around. Many ‘experts’ entirely missed the momentum and are still calling a correction in the prices of the world’s largest companies, in this increasingly digital age.

On the day the Australian women’s soccer team, the Matildas, lost their semi-final match to England on August 17, some very important data was released by the Australian Bureau of Statistics (ABS) that attracted little media attention or public discussion. 

The gap in average weekly ordinary full-time earnings, the most commonly cited of the gender pay gap measures from the ABS, fell for the second straight cycle to the lowest level on record, down to 13.0%. 

The ABS data showed average weekly ordinary time earnings for full-time males was $1,938 in May 2023, and for females, it was $1,686. That represents a gap of around 13%, or how much less women earn as a proportion of full-time male wages, the narrowest gap on record. 

The difference in average full-time wages amounts to around $13,000 each year.

The recent narrowing in the gap has been driven by a bigger rise in women’s full-time wages than men’s and stronger employment growth; full-time adult average weekly total earnings for women jumped 4.6% over the year to May, well above growth in male average weekly earnings of 3.6%.

Female full-time employment stood at 3,875,300 in June, up strongly from 3,654,700 in June 2022, a rise of around 6%. That compares to an increase in male full-time employment of 2.7% over the same period, separate ABS data show.

Great news indeed!

This opened an opportunity for one of my clients to comment on the data – and she was rewarded with excellent media coverage. If you’d like to comment on data that matters, I can help you develop media commentary that is important and on the money.

OECD gender gap measure even narrower than ABS’s

While the ABS uses ‘average’ wages to determine the gender wages gap, the OECD uses ‘median’ wages for its measure,  which is more representative of the wage levels of most men or women as it sits in the middle.

The OECD defines the gender wage gap across developed nation as the difference between median earnings of men and women relative to median earnings of men. The median separates the higher half from the lower half; whereas averages can be skewed by extremes at either end.

So, while the ABS is telling us that the gender wage gap is 13%, OECD data says it is 10%.  The chart below from the OECD shows Australia now leads many other developed nations with a narrower gender wage gap ,and below the OECD average at around 12% – and a stark contrast to the gender wage in Korea, where it is the widest at 31% and Israel at 25%. In the US it is around 17%, in the UK around 14.5%.

Australian women are doing better than their peers in other developed nations, as this chart shows.

Source: OECD

So, the good news indeed, that the gender wages gap is narrowing. Hopefully next time the news will receive the coverage it deserves!

Data in context

All data, however, needs context.

On a more sobering note, once you include bonuses and overtime payments, and annualise casual wages, the gender wages gap is much wider, at 23%.

That is a total remuneration gender gap that is, all the money we receive from work, not just full time wages, according to the Workplace Gender Equality Agency.

So, for every $1 on average a man makes, women earn 77.2c. Over the course of a year, that difference adds up to $25,596.

The 22.8% gender pay gap includes base salary, overtime, bonuses and additional payments. It also includes the annualised full time equivalent salaries of casual and part time workers.

So, there is still work to be done to eliminate the gap entirely.

How can your voice be heard?

If you’d also like to comment on economic facts that matters, I can help you develop media commentary that is not only important, but on the money.

Email me at nicki@spotoncpr.com.

Sometimes in PR, the spin really is on the money.

That is true of the spin I spun on Nvidia back in 2021. I was pitching the potential benefits of investing in Nvidia on behalf of a client, a global asset manager, which held the stock as the biggest holding in its video gaming fund.

The story I pitched to reporters and editors was that if investors wanted to diversify out of the FAANG stocks, Nvidia was a good bet. The company would potentially grow more quickly than the FAANGs in the years to come, given its importance as a key producer of a particular type of computer chip, graphics processing units (GPUs). Demand for GPUs was racing ahead in 2020-21 with pandemic-heightened gaming and the surge in crypto mining.  

Even better, Nvidia’s market share and that of other US chip producers was being protected as US and European regulators were hell-bent on keeping the latest chip technology out of China, as they still are, limiting China’s access to the latest chip technology needed to develop chips to handle AI processes.

Good spin or common sense?

While reporters and editors were far more interested in cryptocurrency than computer chips, I myself was so convinced by the spin that I bought into it.  Even the client thought I was a bit fixated on Nvidia. Luckily, I was.

I bought up through 2022 as Nvidia shares fell. And I have held on to this day.

So, good spin can pay. Or was it common sense?

The logic is clear enough: we’ll need more and more computer chips as we move to an increasingly digital world. It’s common sense, which I think underscored the spin I spun in 2021 on Nvidia.

The US is determined to keep the latest chip technology out of China (With Biden going even harder further than Trump).

I introduced the term ‘FAANNGs’ to reporters earlier this year. Many, still, had not heard of the company, clearly not gamers, and despite the fact it was moving the world’s biggest equity market to become the fifth largest company in the US, overtaking Tesla and Berkshire Hathaway this year and Meta last year.

Many commentators are asking which company can take Nvidia’s dominance as a producer of GPUs which can handle AI computing. As we all now know , Nvidia has shot ahead in 2023 since ChatGPT went mainstream late last year. While talk of a correction in tech shares may get in the way of the momentum, and certainly rising bond yields already have, nevertheless, demand for GPUs will likely be sustained over the long term, wherever bond yields end up.

So, for all those experts who see Nvidia as crashing, claiming its price is unsustainable, I’m not backing that view. I’m holding on, as the newly arrived FAANNG company has no clear competitor, just yet. And it is making lots of money. Not as much as its market cap would suggest, but its profit margins are growing quickly. AMD is on its tail, apparently the closest competitor, and Google is trying with its cloud-based processor, a Tensor Processing Unit (TPU), but for now, Nvidia chips are largely powering AI apps.

So the ‘spin’ that I spun on the client’s behalf back in 2021 was on the money.

Be proud and loud

For organisations that have a good story to tell, don’t hold back. You might need to tell it a few times, before markets back your views, but combine your wisdom with common sense and you could have a winning combination, with the help of a PR hack that just keeps on going with a good story.

Do you want to attract more media coverage with messaging that’s on the money?

Call Nicki Bourlioufas on +61 411 786 933 or email at nicki@spotoncpr.com

Each and every week, the Australian Bureau of Statistics (ABS) publishes a plethora of data that reporters often overlook. Some of my greatest PR successes have been picking up on a piece of very newsworthy data deeply buried in an ABS spreadsheet, having a client comment on it, then issuing the commentary to reporters who have no idea the newsworthy data exists.

Having been a former business editor and journalist for the News Ltd, Fairfax, Dow Jones Newswires, including writing for the WSJ, has helped me to understand what is newsworthy, and a keen awareness that clients should only tell reporters something they don’t already know.

For example, with wealth management clients wanting to be quoted on investment trends, I prepare a diary of all relevant ABS, RBA and ATO releases concerning investment, the economy and markets. On the day of any given data release, I combine newsworthy data with clients’ commentary, giving it context and colour, I then issue a media alert with a catchy headline.

Media mentions often follow, whether in The Australian Financial Review, The Australian, The Sydney Morning Herald, The Age, or on a newswires such as Bloomberg or Reuters, which deliver important international media coverage.

The secret to PR success

As a PR expert well versed in numbers and backed with an economics degree and a very deep understanding of the yield curve, I source the official numbers myself by looking for newsworthy trends in ABS or RBA spreadsheets, seeking record highs or record lows etc. I encourage clients to add their views, then distribute the data on the same day as the report, and media coverage is guaranteed over time.

Similarly, with property or bank clients, I’ve had them comment on monthly RBA interest-rate announcements, banking or loan statistics from APRA, housing finance or property price data from the ABS, or monthly credit numbers from the RBA etc.

A win-win situation for reporters and clients

Reporters appreciate the commentary which they need for the stories they are writing that day, and which makes their lives a little easier as I send them newsworthy information on behalf of clients.

Benefits for clients:

1. Clients appreciate regular media mentions, commenting on the numbers that matter. Not necessarily their own numbers or products, but numbers that are more important to the nation. This helps to establish my clients as thought leaders and experts in their field.
2. This keeps reporters coming back for more commentary because it’s not just spin they are after, but real news, which they come to expect from my clients.
3. The strategy is proactive for clients; they can set the media agenda while still getting their messaging out, after they get reporters’ attention, with my help.

Do you want to benefit from this low cost PR strategy and attract more media mentions?

Email nicki@spotoncpr.com

By Nicki Bourlioufas

Reporters and editors these days aren’t all what they used to be. You’ve probably noticed that news is becoming more generic despite the proliferation of publishers, news websites and other content providers purporting to publish ‘news’.

Indeed, despite the burgeoning number of social media and online news outlets, the same information regularly appears across websites. There’s more volume, but less original material, often triggered by a press release or publicity announcement or even a celebrity tour or book launch. You know when your favourite actor is on the front cover of a news magazine or all over online – he’s got a movie to promote. And many editors and reporters lap up the material. Reporters copy and paste and so, news becomes more generic. Sometimes there is no news, it’s all spin.

 

Indeed, some reporters have become lazy. Rather than source original material, some are used to receiving media releases in their inboxes and copying information verbatim from PR or marketing material and representing that information as news, rather than investigating the facts first. 

On top of this is the proclivity by many journalists and editors to ‘match’ the competition. Too often this means that reporters and editors publish the same information that is on a competitors’ websites without actually asking whether it’s newsworthy. So there is a real sameness to much of what is represented as news.

This is, of course, a great opportunity for those of us who work in public relations who have previously worked in the media ourselves. We know what will catch the eyes of editors and reporters. I can create news by seizing on little-known facts and asking questions that other reporters don’t think to ask.

By sculpting a news story in a media release with newsworthy information, I can then take the next step and set the news agenda. It’s all a matter of writing a media release like a news story with a catchy headline and newsworthy information.

So the PR’s expertise, or at least my own, comes through in two key ways. Firstly, writing like a reporter. Secondly, gathering, interpreting and publishing newsworthy information that I verify as much as possible from third party sources, even as I quote my clients.

So if you are shopping around for a PR professional, it’s worth doing the due diligence and asking if their background is in the media. If it is, you might be getting more bang for your buck than you’d expect. No degree in PR or communications can replace the training received in a newsroom which a PR consultant trained in a newsroom can give you.

In some cases, negative performance of absolute return funds matched market declines, despite the promise of positive returns over time and less volatility. But there are examples of so-called absolute return funds beating the index during this period. [Read more…]

Capital raisings have paid off for participating shareholders, with those priced at bigger discounts such as Flight Centre’s entitlement offer delivering immediate returns and surprising investors.

According to data from consulting firm Vesparum, $20 billion of capital raisings were announced between 1 April and 15 May. The surge in capital raisings came as market volatility levels subsided and the ASX temporarily relaxed capital raising rules in response to the coronavirus pandemic.

Most of these capital issues have been offered to existing retail shareholders at discounts to their market prices in the form of share purchase plans  or entitlement offers to buy additional shares in proportion to existing holdings. Investors have mostly made attractive returns by participating in these COVID-19 raisings, with a median return of 14 per cent for capital issues and 58 per cent for offers priced at a 30 per cent-plus discount to a company’s market price. [Read more…]

With the focus on Black Lives Matter, it’s time to consider the stats on indigenous mortality in Australia – as per the most recent ABS data, Deaths in Australia 2018, there is a whopping 20-year-plus difference in the median age of an indigenous and non-indigenous person, with the median age at death for males at 57.7 years in 2018, 63.0 years for females. In comparison, the non-Indigenous median age at death was 82.0 years. The ABS understates the difference: “While the median age at death for non-Indigenous males and females varied across the five jurisdictions, they were consistently higher than medians for Aboriginal and Torres Strait Islander Australians.” With ScoMo saying “aren’t we lucky to live in Australia,” clearly that luck doesn’t include indigenous Australians. Before we question police, let’s question the institutions that enable these stats. Or the fact that of the Royal Commission into Aboriginal Deaths in Custody’s 339 recommendations in 1991, almost none have ever been implemented. Black Lives Do Matter in Australia – so does indigenous health and living standards, which still mimic conditions in the third world. [Read more…]

Each and every week, the Australian Bureau of Statistics publishes a plethora of data that reporters often don’t look at. Some of my greatest successes in the PR world have been to pick up on a piece of newsworthy data, get a client commenting on it, put the data and commentary in a media release, then issue the release to reporters who have no idea that the newsworthy data exists.

As an example, I have a couple of technology clients that like to be in the media commenting on IT trends. So I prepare for them a diary of all relevant ABS releases concerning IT investing, spending and activity, including the bi-annual Internet Activity report, quarterly GDP data which includes data on software investment and the ABS’s annual report Summary of IT Use and Innovation in Australian Business. [Read more…]