Dan Ives Says NVDA's Recent Underperformance Is A Bump Than Anything Else — 'There's One Chip In The World Fueling The AI Revolution'

• Ives highlighted a disconnect between the AI trade and the companies fueling the AI revolution.
• He also said Nvidia and hyperscalers, which are fueling the AI revolution, are in the penalty box to some extent.
• Ives added that he continues to see chip demand far outstripping supply, estimating the demand-to-supply ratio at 15-to-1.

Tech strategist Dan Ives on Monday downplayed concerns around Nvidia Corp.’s (NVDA) recent underperformance, calling it just a speed bump rather than anything else.

During an interview with CNBC, Ives added that the underperformance of Nvidia and other hyperscalers is due more to the market flocking to memory stocks, calling it the “shiny new toy” effect.

“You’ve seen so many of these names, when the ones that are actually at the center, whether it’s the hyperscalers or Nvidia… those are actually the ones, to some extent, almost in the penalty box,” he said.

Nvidia shares were down more than 1% in Monday’s pre-market trade.

Ives Highlights Disconnect In AI Trade

Ives highlighted a disconnect between the AI trade and the companies fueling the AI revolution.

“The reality is, there’s one chip in the world fueling the AI revolution, that’s by the godfather of AI the revolution, Jensen of Nvidia,” he said.

Nvidia’s forward price-to-earnings ratio is currently hovering around 21.2, according to data from Koyfin, recovering slightly after falling to 19.6 last week, levels that were seen in January 2019.

“When you look at memory, where is memory with Nvidia? Where's memory without hyperscalers? This all plays into what's going to be a crucial earnings season in Q2 for monetization,” he said.

Ives added that he continues to see chip demand far outstripping supply, estimating the demand-to-supply ratio at 15-to-1.

Ives Says SKHY’s US Listing Is Just The Start

Ives said that the U.S. listing of SK Hynix Inc. (SKHY) is just the start, after the South Korean DRAM manufacturer raised $26.5 billion last week and debuted on Nasdaq at $170 per American Depositary Receipt (ADR), compared with an issue price of $149.

“The reality is, for the first time in 30 years, the U.S. is ahead of China when it comes to tech. I think what you saw with SK, you’re going to see more and more companies tap the U.S. market,” he added.

Ives also noted that the U.S. offers these companies not just liquidity but is also at the center of the AI trade.

Ives Says Silicon Valley Will Be Looking At What AAPL Does With OpenAI

The tech strategist described Apple Inc.’s (AAPL) lawsuit against OpenAI as the iPhone maker defending its turf, adding that others in Silicon Valley will be watching what Apple does with OpenAI.

“For Apple, it’s a shot across the bow. They’re basically saying, no más. This needs to stop. I think it’s important to what they’re doing, because they’re defending their turf, as well as with Google and Gemini, they finally have an AI strategy,” he said.

Apple sued OpenAI in federal court in California last Friday, alleging a widespread effort to steal its trade secrets.

The lawsuit alleges that OpenAI directed current and former Apple employees to provide confidential documents, product blueprints, and physical components. Apple claims the effort was orchestrated by OpenAI's leadership to accelerate the development of its own competing AI devices.

NVDA stock is up 13% year-to-date and 29% over the past 12 months. The S&P 500 ETF (SPY) is up 21% over the past 12 months, while the Invesco QQQ Trust (QQQ) is up 31%.

The iShares Semiconductor ETF (SOXX) is up 136% during this period, while the Global X Artificial Intelligence & Technology ETF (AIQ) is up 45%.

Also See: Fed Flags AI Demand, Middle East Conflict As Contributors To Inflation Pressures — FOMC Ready To Act 'Forcefully' To Keep Expectations Anchored

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