This chart shows a breakout for the whole US technology sector. We have seen plenty of those in recent times, but this one is important. It’s an index but also it is a moment in time. A year from now this chart may be miles higher and the opportunity to buy the breakout will have gone. We need to seize the opportunity.
Table of Contents
Here is another chart which looks amazing.
AMD’s Data Centre Business Takes Off
Data Centre segment revenue grew 38pc year over year and 43pc sequentially to a record $2.3bn. Server CPU and Data Centre GPU sales both set quarterly and annual revenue records as sales of our Data Centre products accelerated throughout the year.
Lisa Su, CEO, Advanced Micro Devices, Q4 2023, 31 January 2024
Innovation proceeds apace.
We closed multiple wins with large financial, energy, automotive, retail, technology and pharmaceutical companies, positioning us well for continued growth, based on expanded production deployments planned for 2024. A growing number of customers are adopting EPYC CPUs for inferencing workloads, where our leadership throughput performance deliver significant advantages on smaller models like Llama 7B, as well as the power head nodes in large training and inference clusters. Looking ahead, customer excitement for our upcoming Turin family of EPYC Processors is very strong. Turin is a drop-in replacement for existing 4th Gen EPYC platforms that extends our performance, efficiency and TCO leadership with the addition of our next-gen Zen 5 core, new memory expansion capabilities and higher core counts.
Our Data Centre GPU business accelerated significantly in the quarter, with revenue exceeding our $400m expectations, driven by a faster ramp for MI300X with AI customers. We launched our MI300 accelerator family in December with strong partner and ecosystem support from multiple large cloud providers, all the major OEMs and many leading AI developers.
MI300X GPUs deliver leadership generated AI performance by combining our high-performance CDNA 3 architecture with industry-leading memory bandwidth and capacity. Customer response to MI300 has been overwhelmingly positive. And we are aggressively ramping production to support the dozens of cloud, enterprise and supercomputing customers deploying Instinct accelerators. In Cloud, we are working closely with Microsoft, Oracle, Meta and other large cloud customers on Instinct GPU deployments, powering both their internal AI workloads and external offerings.
Lisa Su, CEO, Advanced Micro Devices, Q4 2023, 31 January 2024
Dell Technologies Moves Into AI
Dell is a newcomer to Quentinvest but it is classic 3G with a great chart. Dell of desktop computing fame is moving into AI.
Our FY24 revenue was $88.4bn, with operating income of $7.7bn and EPS of $7.13. In a year where revenue declined, we maintained our focus on operational excellence, delivering solid earnings per share and outstanding cash flow. FY24 was one of those years that didn’t go as planned, but I really like how we navigated it. We showed our grit and determination by quickly adapting to a dynamic market, focusing on what we can control, and extending our model into the high-growth AI opportunity.
We have positioned ourselves well in AI. We’ve already started to benefit from the momentum we’re seeing. We saw strong demand continue for our AI-optimised server portfolio, including our flagship PowerEdge XE9680, which remains the fastest-ramping solution in company history. We have just started to touch the AI opportunities ahead of us, including broader adoption of AI by enterprise customers and the projected growth in unstructured data where we are well-positioned with industry-leading storage solutions. We believe the long-term AI action is on-prem where customers can keep their data and intellectual property safe and secure. PCs will become even more essential as most day-to-day work with AI will be done on the PC. We remain excited about the long-term opportunity in our CSG [client solution group] business. Look for us to make a number of new product and solution announcements at Dell Technology World in May that will help customers get started with AI and make it easy.
Our storage business will benefit from the exponential growth expected in unstructured data and we are bullish on the coming PC refresh cycle where we are well-positioned. We are optimistic about FY25 and expect a return to growth above our long-term framework.
Jeff Clarke, chief operating officer (COO), Dell Technologies, Q4 2024, 29 February 2024
These shares look well placed for the brave new world of AI and AI-enabled PCs that lies ahead,
And now for one of my favourites.
One of the Most Explosive Charts I Have Ever Seen!
Super Micro Computer (SMCI) has one of the most explosive charts I have ever seen!!! SMCI is one of my AI Holy Trinity alongside Nvidia and ARM Holdings. The shares are set to open sharply higher as they are included in the S&P 500.
I remember once talking to Anita Roddick of Body Shop and she said to me – however much profit you think we are going to make we are going to make more. It’s very naughty to say such a thing to a journalist but there we are. I suspect that Charles Liang, CEO of SMCI, in an unguarded moment might say something similar.
You have seen these quotes before but they are so punchy.
The exciting news is that, finally, we are entering an accelerating demand phase now from many more customer wins. To support faster growth, we have increased our working capital recently by raising about $600m with an equity offering (since when they have raised an additional $1.5bn plus with an offering of senior convertible notes). Moreover, we have other programs to increase our cashflow without additional equity dilution to support short and long-term sustainable growth. Overall, I feel very confident that this AI boom will continue for another many quarters, if not many years. And together with the related inferencing and other computing ecosystem requirements, demand can last for even many decades to come, we may call this an AI revolution.
Supermicro is at the forefront of the AI revolution, where the pace of innovation is accelerating. We are leading the race by developing the most innovative AI infrastructure on many platforms at rack scale, for almost any industry, and for any market vertical. As the market leader, we have been preparing to more than double the size of our current AI portfolio with the coming soon NVIDIA CG1, CG2 Grace Hopper Superchip, H200 and B100 CPUs — GPUs, L40S Inferencing-optimized GPUs, AMD MI300X/MI300A, and Intel’s Gaudi 2 and Gaudi 3. All these new platforms will be ready for high volume production in the coming month and quarters.
Charles Liang, CEO, Super Micro Computer, Q2 2024, 29 January 2024
Semiconductor Industry Enters High-Powered Growth Phase
Results are due imminently from Broadcom (AVGO), another market leader in the semiconductor space. Semiconductors sit at the heart of the technology/ AI revolution and the industry is in a vigorous, even explosive, growth phase.
I show the chart in this concertinaed fashion to highlight the strength of the uptrend. Don’t worry that you are not buying at the beginning of the climb, make sure to board the train. This business is superbly placed and could have a long way yet to go.
Broadcom is a serial acquirer which, if done well, can drive extraordinary growth.
Since 2020, even though we have not made an acquisition, we have shown a robust trajectory of growth, driven by semiconductor growing at an 18pc CAGR [compound annual growth rate] over the past three years. In fiscal 2023, operating profit grew by 9pc year on year, and our free cash flow grew 8pc year on year to $17.6bn, or 49pc of revenue. We returned $13.5bn in cash to our shareholders through dividends and stock buybacks. As you well know, we just closed the acquisition of VMware on November 22nd, just about four weeks into Broadcom’s fiscal 2024.
We are now refocusing VMware on its core business of creating private and hybrid cloud environments among large enterprises globally and divesting noncore assets. Reflecting the consolidation of a restructured VMware into our 2024 outlook, we forecast our fiscal year ’24 consolidated revenue to be $50bn. We expect the integration to take about a year and will require close to $1bn in transition spending, which will largely be done as we exit fiscal ’24. Regardless, we expect our fiscal year 2024 adjusted EBITDA to be approximately 60pc of revenue.
Hock Tan, CEO, Broadcom, Q4 2023, 7 December 2023
Prospects look exciting as the VMware business is integrated.
Revenue from generative AI in fiscal ’23 reached 15pc of semiconductor revenue, in line with our expectation. And moving on to fiscal ’24, we forecast semiconductor solutions revenue to be up mid to high single-digit percent year on year. We expect revenue from generative AI to represent more than 25% of the semiconductor revenue, consistent with prior guidance, which more than offset the lack of growth from non-AI semiconductor revenue. With the consolidation of VMware bringing our infrastructure software segment revenue to 20bn and the semiconductor segment holding a high single-digit growth year on year, we are therefore guiding our fiscal ’24 revenue to be $50bn, which represents 40pc year-on-year growth from fiscal ’23.
Hock Tan, CEO, Broadcom, Q4 2023, 7 December 2023
ELF boasts another stunning chart. On the fundamentals, the company has big opportunities in its domestic US market and internationally.
ELF Opens First European Office
e.l.f. Beauty’s opening of its first European office in London is proof of the company’s international opportunity, which is still somewhat underappreciated by Wall Street, Jefferies analysts say in a note. The cosmetics company’s general manager of international, Christine Cassidy, is qualified to grow the business after holding several positions focused on expansion into the U.K. and other European countries. The company’s total addressable market in the U.S. is even bigger than the market realises, the analysts say. e.l.f.’s latest move in London should result in faster expansion and put them ahead of market expectations, the analysts add.
Dow Jones Newswires, 27 February 2024
This is a wonderful business.
In Q3, we grew net sales by 85pc, increased gross margin by nearly 350 basis points, and delivered $59m in adjusted EBITDA, up 61pc versus prior year. Our vision is to create a different kind of beauty company by building brands that disrupt norms, shape culture, and connect communities through positivity, inclusivity, and accessibility.
We’ve executed against this vision and delivered exceptional, consistent category leading growth. Q3 marked our 20th consecutive quarter of net sales growth, putting e.l.f. Beauty in a rarefied group of consistent, high growth consumer companies. We’re one of only five public consumer companies out of 274, that has grown for 20 straight quarters and averaged at least 20pc sales growth per quarter. Across our business, we’ve continued to prioritize three areas with significant runway for growth, color cosmetics, skincare and international.
Tarang Amin, CEO, E.L.F. Beauty, Q3 2024, 6 February 2024
All the numbers are stunning.
In Target, our longest-standing national retail customer, we’re the number one brand with about a 19pc share, nearly double the share we had in Target just a few years ago. We’re focused on replicating our success at Target across other key retailers and are making great progress towards that ambition.
In skincare, we also continue to outperform the category. In Q3, e.l.f. SKIN grew 89pc in tracked channels, 10 times category growth of 9pc. We grew our share by 60 basis points and gained six rank positions, increasing our rank to the number 14 brand as compared to the number 20 brand a year ago, e.l.f. SKIN today holds a 1.4pc share and a significant runway with the number one brand holding 14pc share.
We’re also making progress with Naturium, the clinically effective biocompatible skincare brand we acquired in October. Naturium has doubled our skincare penetration to 18pc of retail sales and gives us a fast growing complementary brand to further our aspirations in the category. Naturium has seen exceptional growth with net sales growing at an 80pc CAGR over the last two years. We’re pleased by the strong growth that Naturium continued to deliver in Q3.
Turning to international, our net sales grew a 119pc in Q3 and drove approximately 15pc of our business as compared to 13pc a year ago. We saw terrific growth in the U.K. and Canada, our largest global markets, and we’re enjoying success in our expansion to other countries as well. As compared to our number three position in the U.S., e.l.f. is the number four cosmetics brand in Canada and the number six brand in the U.K. In Italy, where we just launched this fall, e.l.f. is already the number one brand in Douglas across both mass and prestige. We see significant runway to expand our brands globally.
Tarang Amin, CEO, E.L.F. Beauty, Q3 2024, 6 February 2024
ELF is a textbook marketing success story.
Over the past four years, we’ve increased our marketing investment from 7pc of net sales to 22pc. Our marketing investment is working, driving ROI [return on investment] multiples above industry benchmarks and helping us reach new audiences. Since 2020, our unaided awareness in the U.S. has doubled from 13pc to 26pc. That 26pc unaided awareness today compares to the leading U.S. mass cosmetics brand at 52pc, illustrating significant runway for growth.
Tarang Amin, CEO, E.L.F. Beauty, Q3 2024, 6 February 2024
The future is more of the same.
In summary, as we enter our 20th year as a company, we continue to deliver exceptional results. What gives me confidence for the future is a significant white space we see in color cosmetics, skin care, and international. We continue to believe we are still in the early innings of unlocking the full potential for our brands.
Tarang Amin, CEO, E.L.F. Beauty, Q3 2024, 6 February 2024
Strategy – Buy the Above and The Famous Five
My Holy Trinity of AI stocks is Nvidia (NVDA), Super Micro Computer (SMCI) and ARM Holdings (ARM). This becomes the Gang of Four when I add my Bitcoin stock, Microstrategy (MSTR) and the Famous Five when I add my beauty industry disruptor, E.L.F. Beauty (ELF).
I remain extremely bullish on all these shares.
Share Recommendations
Nvidia. NVDA. Buy @ $853
Super Micro Computer SMCI. Buy @ $1103
Microstrategy. MSTR. Buy @ $1295
E.L.F. Beauty. ELF @ $207
Broadcom. AVGO. Buy @ $1434
Dell Technologies. DELL. Buy @ $124
Advanced Micro Devices. AMD. Buy @ $208.50
I have not recommended ARM shares in this alert because I would like to see the shares making more progress and maybe also some evidence that their exciting plans are being reflected in accelerating growth.
Today was a wild day in the stock market, especially for the shares that I favour. There may be a hangover but I believe we are at the beginning of an exciting period, not the end. The charts look amazingly positive and the stories could hardly be more incredible as the technology revolution steps up a gear.
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