Episode summary
Chip Stocks’ Best Quarter Ever Is Ending With Some Wild Swings | Bloomberg Intelligence
Bloomberg Intelligence
· · 23 min · Hosts: Paul Sweeney · Guests: Mandeep Singh, Poonam Goyal, Kenneth Shea, Erin McLaughlin
Summary
Chip stocks are still the dominant market story, with the Bloomberg Intelligence guest arguing that the rally is being powered by visible AI demand, huge backlogs and accelerating revenue realization rather than simple supply scarcity. He pointed to Nvidia’s revenue visibility, hyperscaler spending and the broader “picks and shovels” trade as the main beneficiaries, while warning that some memory price gains may prove temporary if new supply comes online. He also said Microsoft’s cloud narrative has weakened relative to Google and Amazon, though its valuation could still look cheap if backlog converts into revenue.
Nike’s turnaround remains uneven, with the analyst expecting North America to post positive sales but China to stay under pressure with a high-teens decline. The view was that China is still the key issue: too much inventory, too much discounting and not enough local brand heat. Still, the analyst said Nike has not lost its product instincts; it has simply allowed competition to encroach and needs to move faster. New partnerships such as Caitlin Clark and Skims were framed as helpful for women’s business and brand visibility.
Constellation Brands is expected to face another difficult quarter as beer becomes nearly the whole company and industry pressures persist. The analyst cited weaker drinking habits among Gen Z, cannabis substitution, GLP-1 usage and inflation as headwinds, though tariff relief and modest margin improvement could help. The Conference Board’s consumer confidence reading came in below expectations, but the economist said lower gas prices and resilience helped expectations even as consumers worried more about jobs and future interest rates.
Key takeaways
- The guest said semiconductor demand is being driven by AI backlogs and that Nvidia is best positioned to monetize the cycle.
- He said memory price increases from Micron may not be sustainable once Samsung and SK Hynix add more supply.
- The analyst said Microsoft is trailing peers because it lacks its own leading LLM and its Azure growth is lagging Google Cloud.
- Nike’s biggest problem remains China, where the analyst expects high-teens sales declines and says inventory and discounting still need fixing.
- Constellation Brands is battling structural beer demand pressure from Gen Z, cannabis and GLP-1 use, even as tariffs ease.
- The Conference Board economist said lower gas prices helped confidence, but consumers are still worried about labor market conditions and higher rates.
Notable quotes
“when you look at that backlog number you start to believe that may actually come true and uh Nvidia is at the forefront of monetizing that sort of demand”
“I feel that pricing lift is not sustainable and it's a matter of a quarter or two before we start to see you know some uh tapering of that”
“The company is still under a turnaround. Um, North America is back on its feet. We're expecting positive sales when they report this evening”
“The first thing that they need to fix is the inventory. There's too much inventory on the floor in China”
“Gen Z is not drinking as much as their parents. Um, illegal cannabis is now easily available um from in most places around the country”
How the episode opens
Bloomberg Audio Studios podcasts radio news. You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10 a.m.
Eastern on Apple CarPlay and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts or watch us live on YouTube. Chip stocks are heading for their best quarter ever driven by demand for artificial intelligence equipment, but investors are wondering how much further the rally can go.
So, let's put it to an expert Mandep Singh, global head of tech research for Bloomberg Intelligence joins us here. I mean,
What's going on with the world of chips? Is it just I don't get it. I mean, is it just this supply and demand and there's not enough supply and so anybody who's got them in is in the driver's seat in terms of pricing?
I mean more so I would characterize it as uh a lot of these companies have huge backlog numbers notably Nvidia which has said they have you know up to a trillion dollar in revenue visibility through the next six seven quarters. So uh when you have companies guiding like that and all the hyperscalers which are spending money on these chips they have an aggregate backlog of two trillion. Now when Jensen says we will have 3 to4 trillion in spend by 2030 I think uh you know when you look at that backlog number you start to believe that may actually come true and uh Nvidia is at the forefront of monetizing that sort of demand.
So there is no doubt that AI has had an inflection point in terms of usage and inference demand has been off the charts. But how quickly it's realizing into topline growth for some of these companies, I think that's where the market has been positively surprised and that's why you see estimates continue to go up.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- chip stocks momentum
- ai equipment demand
- nike earnings preview
- constellation brands earnings
- consumer confidence data
Companies and tickers mentioned
- NKE
- STZ
- Nike
- Constellation Brands
- Conference Board
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Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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