On Wednesday, the trading volume of some short-term options contracts surged. Some market participants believed that Keith Gill, known as Roaring Kitty, the leading retail investor, may have sold some of the company's recently disclosed options positions.$NVIDIA (NVDA.US)$The stock prices of AI giants have plummeted. In the future, Wall Street still bullish on the AI trend, but with a focus on those that have not seen growth like Nvidia has this year.$Intel (INTC.US)$with$Advanced Micro Devices (AMD.US)$Such "AI laggards" as compared to Nvidia, $Micron Technology (MU.US)$and $Broadcom (AVGO.US)$large chip giants such as Intel and AMD have weaker stock prices compared to popular chip giants with growth of over 60% this year.

According to Melius Research, the stock price of these "AI laggards" in the AI field, such as Intel, AMD, IBM, and even Apple, may start to catch up with Nvidia and $Microsoft (MSFT.US)$and Google, the absolute leaders in the field of artificial intelligence, leading a new round of "AI investment frenzy."

Here, the "latecomers" do not refer to their backward development in AI technology, but to their relatively late layout in a specific field, far less market share than industry leaders, or slower stock price growth than leaders. For example, although the global AI chip leader Nvidia's market share in the data center AI chip field is close to 90%, AMD's market share is far behind Nvidia's. However, Nvidia's dominant position will undoubtedly face huge threats from AMD. Although Intel seems to have no market share in the data center AI chip market, its x86 ecological advantage may boost Intel's valuation by participating in the layout of AI PC.

Compared to the market share of AI big model leaders such as OpenAI, Microsoft, and Google, IBM's share is undoubtedly at a relative disadvantage, but relying on a deep layout of an AI developer ecosystem as well as the powerful open source alliance, IBM, one of the "AI latecomers", is expected to get a share in the huge market of AI big models. There is some controversy as to whether Apple is one of the "AI latecomers." On the one hand, it is one of the "Magnificent 7" in the science and technology industry, and there is a possibility of over-speculation on the stock price level. On the other hand, it is indeed very late in the layout of AI big models, but with the powerful iOS ecosystem, it is expected to sit on an equal footing with OpenAI in terms of market share in AI smartphones.

To fund managers and market strategists in the world's largest asset management giant BlackRock Inc., as well as European asset management giant BNP Paribas Asset Management, the unprecedented investment frenzy surrounding artificial intelligence in the global stock market has not yet come to an end. A new round of "AI investment frenzy" will continue to drive the global stock market's "long-bull trend" - that is, constantly setting new highs. Even economists predict that the optimistic mood based on the development of AI technology will promote extra multiple expansions, driving the benchmark index of US stocks - the S&P 500 index up.$S&P 500 Index (.SPX.US)$Please use your Futubull account to access the feature.

Hedge funds on Wall Street bet that after the previous AI frenzy that lasted 18 months drove the seven big tech giants to skyrocket, they might lose the momentum to continue to rise. Thus, they are turning their attention to the "AI laggards" mentioned by Melius Research.

The seven big US technology giants with high weightings in the S&P 500 index, called the "Magnificent 7," include: Apple, Microsoft, Google, $Tesla (TSLA.US)$, Nvidia, and meta platforms.$Amazon (AMZN.US)$and $Meta Platforms (META.US)$Global investors will flock to the seven major technology giants throughout 2023 and the first half of 2024. They are betting that, due to the large market size and financial strength of tech giants such as Apple and Google, they are in the best position to use artificial intelligence technology to expand their revenue in the midst of the frenzy of investing in generative AI by global companies.

Melius Research emphasizes that technology companies such as Intel, AMD, IBM, and even Apple are all involved in the field of AI, but they have not been able to catch up with the biggest winner in the field of artificial intelligence such as Nvidia in 2023 and the first half of this year.

Over the past month, the stock price performance of the three companies, Intel, AMD, and IBM, has been significantly better than that of technology giants, while the representative of artificial intelligence, the giant Nvidia and other technology giants have experienced a slight decline in their stock prices during the same period.

Intel may be the biggest AI winner in the new round of the "AI investment frenzy." It is a basic consensus of most investors that Trump's election victory will result in more intense trade protection policies than when he came to power in 2016 and during the Biden administration's tenure. It can be imagined that the "know-it-all" advocating a trade protection policy, who is eager to bring high-end manufacturing back to the United States, if successfully elected, may escalate the subsidy support level for Intel in the future.

These "AI latecomers" are receiving a powerful trend boost: a style switch in US stock investment

It is crucial to note that not only are they in an advantageous position in terms of stock price growth, market sentiment, and profit expectations, but the "AI laggards" also have very low performance expectations. This means that they are much easier to exceed in terms of performance compared to giants like Nvidia, whose stock prices have soared. This indicates that they may be in a very favorable position for the rest of 2024.

The shifting of the US stock market style will also help the stock price of these "AI laggards", as the recent strong performance of US small-cap stocks has far exceeded the 7 major technology giants. With market expectations for a large rate cut by the Federal Reserve soaring, funds are beginning to move toward companies outside of the seven tech giants with high growth potential. After all, the valuations of the giants are already very high, and the market favors stocks that are cheaper and have a certain investment attraction as the interest rate drops, such as Intel and other "AI laggards", which not only have the label of AI but also strong fundamental support.

The index tracking small technology stocks rose 3% on Tuesday, the largest single-day increase since December last year, while the large technology stock index fell 0.4%. Although large-cap stocks are still the deciding factor in performance this year, small-cap stocks have been favored in the past month. The small-cap technology stock index has risen more than 10%, while the increase in large-cap stocks is only 3.8%.

Ben Reitzes, an analyst at Melius, wrote in a recent report, "We believe that there will be a 'catch-up' trade fad for companies in the semiconductor, hardware, and software industries that have lower market expectations, which means that weak companies are more likely to exceed performance expectations than giants like Nvidia, whose stock prices have soared. He added that a similar situation occurred in 2023 and that "weak companies" performed well in the second half of the year.

It is worth noting that Reitzes included Apple, one of the seven major technology giants, on the "AI laggard" list. Since April, the stock price of this consumer electronics giant has been steadily rising, especially since Apple demonstrated the long-awaited intelligent smartphone AI function, the stock price has been particularly strong.

The technology sector strategy team from Baird said that investors are starting to turn to stocks with strong fundamentals but very low performance expectations, especially those related to AI, leaving plenty of room for growth. He said, "The AI leaders have doubled in the past year, and may face a slowdown in the future." "Even if you're not a rocket scientist, you'd think these stocks are over-owned, and the overlooked ones may continue to be supplemented."

Baird also specifically mentioned other stocks that he believes will benefit from this transaction, including software company $F5 Inc (FFIV.US)$, electronic measurement instrument company $Keysight Technologies (KEYS.US)$, and semiconductor-related companies $Diodes (DIOD.US)$,$Coherent (COHR.US)$N/A.$Lumentum (LITE.US)$And$Aehr Test Systems (AEHR.US)$.

In the first half of this year, large technology stocks such as Nvidia, Microsoft, and Google pushed up the entire US stock market, and their valuations have also reached historical highs, making their stock price increases face greater difficulties for the rest of 2024. The strategy team at Citigroup recently suggested that investors take a profit-taking strategy on these tech giants and "rebalance more widely in the AI stocks across the entire value chain."

Forecast data from Bloomberg Intelligence shows that the profit growth of the seven major technology giants will slow significantly. At the same time, the stock prices of AI big winners such as Nvidia and Microsoft are significantly higher than their long-term PE ratios, while laggards such as IBM and Intel have relatively low valuations.

If the "AI prophet" returns, Intel will be the biggest AI winner in the second half of the year?

Investors generally believe that the Trump assassination attempt may be one of the most important turning points in the US election, and it will strengthen Trump's political leadership image, especially in the minds of his supporters, where he is seen as one of America's historical heroes. Even in the eyes of some Republican supporters, Trump's surviving under the protection of God means that he is the only choice for the next president. By comparison, the weaknesses of the current president Biden, such as his on-the-spot response, speech logic, and even party support rate, are more prominent.

The US 2024 election prediction platform Polymarket shows that Trump's chances of winning in the November election soared by about 10 percentage points after the shooting incident, reaching 70%. His competitor Biden's winning probability further dropped to 18%.

Therefore, Trump's victory has become the basic consensus of most investors, and from the latest news, Trump, who is known as the "AI prophet," may be more fierce in trade protectionism than when he came to power in 2016 and during the Biden administration.

It is imaginable that if the "understanding king" who pursues trade protection policies and urgently hopes that high-end manufacturing will return to the United States is successful in the future, the subsidy support strength of Intel may continue to increase, and perhaps the "king of chip foundries" will soon have a truly powerful competitor in Intel.$Taiwan Semiconductor (TSM.US)$ Judging from the trend of Intel's stock price in the early US stock market on Wednesday, Intel's stock price is weaker than that of Taiwan Semiconductor,

which occupies a high weighting in the S&P 500 index. Global investors will continue to flock to the seven major technology giants, betting on the frenzy of investing in generative AI by global companies. $ASML Holding (ASML.US)$At the same time as many chip stocks including Nvidia saw their stock prices plummet by over 5%, [company name] saw a big increase of over 6% at the opening bell, going against the trend!

Perhaps the market has already started pricing in that Intel may become one of the biggest winners after the 'understand king' comes to power, and also pricing in that Intel, which is considered as one of the 'AI laggards', is expected to attract more and more funds in the second half of the year with its low stock price, undervaluation and AI label, and its stock price rise is expected to lead the entire US chip sector.

Melius pointed out in the research report that AMD and Intel are expected to benefit from the AI PC wave, as the two x86 architecture chip giants integrate CPU+NPU+GPU processor hardware for new AI PC terminal devices that run the Microsoft Windows OS. At the same time, Microsoft is about to launch the "Recall" function in its "Copilot+ PC," which Melius believes may be the closest upgrade reason to the killer application.

In Melius's view, AI PCs may be an important catalyst for Intel's continued stock price growth. For decades, Intel has deeply cultivated the x86 CPU architecture field on the PC side, already possessing a strong software, hardware and supply chain cooperation system as well as a huge loyal user group in the PC field.

The brand-new Core Ultra processor introduced by Intel integrates the AI dedicated neural processing unit (NPU) and Arc GPU into the CPU. The NPU is specially designed for accelerating AI inference tasks. This integrated CPU + NPU + GPU central processor is designed as the "most efficient processor" of the company, marking the official arrival of the AI PC era. The Lunar Lake processor aimed at notebook computers is scheduled to be released in the second half of 2024. This chip has a "brand-new low-power architecture and significant IPC improvement," and the AI data processing performance of the GPU and NPU modules is three times higher than that of Meteor Lake.

According to the latest forecast data from Canalys research firm, 2024 can be called the "first year of AI PCs." It is expected that the global AI PC shipment in 2024 will reach 51 million units, accounting for 19% of the total PC shipment. But this is only the beginning of the market transformation. It is estimated that by 2028, the AI PC shipment will reach 208 million units, accounting for more than 70% of the total PC shipment market share. The compound annual growth rate (CAGR) between 2024 and 2028 is expected to reach an astonishing 42%.

Edited by Jeffrey