Source: Zhitong Finance "Since 1950, the S&P 500 index has risen more than 10% 21 times as of the end of May. In about 90% of these cases, the S&P 500 index rose for the rest of the year. There were only two instances of declines for the rest of the year, in 1987 (-13%) and 1986 (-0.1%)." With the rebound of the stock market, the old adage "Sell in May and Go Away" seems to have been a bad advice once again. Last month, the S&P 500 index rose 4.8%, the best May performance since 2009. The NASDAQ 100 index rose nearly 6.2%, and the NASDAQ Composite Index rose 6.9%. Goldman Sachs FICC & Equities Trading Division said: "History doesn't really support this saying. Don't sell, leave the market (go on vacation), and enjoy the good times." The rising trend is still to be continued? If history is any guide, it may indicate that the rise of the stock market is not over yet. Looking ahead to the rest of 2024, Scott Rubner, Managing Director of the Goldman Sachs Global Markets Division and tactical expert, pointed out the following historical background for investors. Rubner stated that the S&P 500 index has risen 10.7% year-to-date, and since 1950, the S&P 500 index has risen more than 10% 21 times as of the end of May. In about 90% of these cases, the S&P 500 index rose for the rest of the year. There were only two instances of declines for the rest of the year, in 1987 (-13%) and 1986 (-0.1%). "Since 1950, the median return of the last 7 months of each year (June 1 to December 31) is 5.4%. In the aforementioned 21 cases, the average performance of the last 7 months increased to 8.1%." Rubner added. Rubner also pointed out that the NASDAQ index has risen for 16 consecutive Julys, with an average return of about 4.64%.

From the moment the bullet grazed Trump, the outcome of the 2024 U.S. presidential election was almost certain, and Musk even compared Trump to one of America's greatest presidents, Theodore Roosevelt, praising his unwavering spirit as a new generation of American leaders. After the shooting incident, Trump's already leading support rate rapidly increased, significantly outpacing current President Biden. Trump, who holds the title of the 'understanding king', has once again unleashed the 'MAGA wind' that has fully swept Wall Street. These top institutions are embracing stocks that are expected to benefit long-term from the 'understanding king' policy with real money, and among them, the veteran chip giant that created the x86 architecture and is accompanied by an AI tag has taken a unique rebound trend amidst the overall decline of chip stocks. $Intel (INTC.US)$Institutions all over Wall Street are embracing stocks that are expected to benefit long-term from the 'understanding king' policy with real money amidst the overall decline of chip stocks. Intel, a veteran chip giant that created the x86 architecture and is accompanied by an AI tag, has taken a unique rebound trend.

According to Polymarket, the US 2024 election prediction platform, the probability of Trump winning in the November election surged more than 10 percentage points after the shooting incident, reaching an astonishing 75%, and currently hovering around 63%. His competitor, Biden, has plummeted and is only around 5% in terms of his odds of winning, while the support rate for Vice President Harris has risen to around 20%, but still cannot be compared with Trump. Investors in the financial markets generally believe that the incident in which Trump was attacked will be one of the most important turning points in the US election, which will fully strengthen Trump's political leadership image and pave the way for him to return to the White House in November. Especially in the minds of the voters who support Trump, he is viewed as one of the historic heroes who united American voters. Even some gold owners who support the Republican Party but not Trump believe that Trump, who has survived the bullet under God's protection, means that the next president can only be him. In contrast, the weaknesses of his opponent from the Democratic Party, the incumbent president Biden, in on-site response, speech logic, and internal support rate are particularly prominent.

On Wall Street, since Biden's poor performance in last month's presidential election debate boosted Trump's prospects for winning, 'Trump trade' has swept global markets. The coverage of 'Trump trade' is very extensive, and traders and strategists generally agree that under the tone of the MAGA policy, Trump's election will stimulate inflation combination trades that benefit from loose fiscal policies and greater trade protectionism - that is, betting on the rise of the US dollar, the increase of US bond yields, as well as the rise of domestic industrial giants, banks, medical care, and energy stocks, all of which have rebounded against the trend recently following the 'Trump trade' wave.

MAGA is the English abbreviation of 'Make America Great Again'. It can refer to the tone of all policies of the Trump administration, and it is also used by some mainstream media to refer to Trump himself and American voters who support him enthusiastically. The term 'Trump economics' created by the media is equivalent to low interest rates and low taxation, and the goal is to 'make America great again' through a loose fiscal plan dominated by low-interest and tax cuts.

Intel, which is known as the most important 'understanding king concept stock', is perhaps the biggest winner among the new wave of 'AI investment frenzy'. It has become a basic consensus among most investors that Trump will win. From the latest news, it seems that Trump, who has the title of 'King of Understanding', may be more vigorous than when he took office in 2016 and during the Biden administration period in terms of trade protectionist policies.

The MAGA trend is sweeping across Wall Street, and Intel is considered as the most core 'understanding king concept stock'.

In the view of some analysts, investors can imagine that the 'King of Understanding', who pursues trade protectionism, and desperately wishes to bring high-end manufacturing back to the US, will successfully return to the White House in November, and the future subsidies for Intel may continue to rise. It is even possible that policy power will be used to force Taiwan Semiconductor to transfer some of its core chip orders to Intel or to the chip factory located in the US, which will drive the US chip manufacturing industry into a prosperous growth situation.

Trump has frequently emphasized the importance of the trend of 'bringing manufacturing back to the US' in his recent speeches. In his opinion, Taiwan Semiconductor, which has the title of 'Chip OEM King', has seized the prosperity that originally belonged to American chip manufacturers. Trump said that Taiwan Semiconductor has seized almost all chip manufacturing in the US and has not received any benefits. From his remarks, we can see that Trump is striving to launch a stricter trade protection policy after taking office, especially he hopes that two major American chip giants, Intel and GlobalFoundries, can seize the huge chip orders of TSMC.

According to Wall Street, since Biden's poor performance in the last presidential election debate, 'Trump trade' has swept global markets. 'Trump trade' has widespread coverage, and traders and strategists generally agree that under the tone of the MAGA policy, Trump's election will stimulate inflation combination trades that benefit from loose fiscal policies and greater trade protectionism - that is, betting on the rise of the US dollar, the increase of US bond yields, as well as the rise of domestic industrial giants, banks, medical care, and energy stocks, all of which have rebounded against the trend recently following the 'Trump trade' wave.

After Trump's remarks about upgrading chip manufacturing and trade protection, U.S. chip stocks plummeted across the board, as most chip giants rely on Taiwan Semiconductor Manufacturing Company (TSMC) capacity. Trump's remarks undoubtedly dealt a heavy blow to TSMC's prospects, making it impossible for TSMC to boost its sluggish stock price even if its performance exceeded expectations. Chip giants such as NVIDIA and AMD that rely on TSMC also face uncertain prospects for production capacity.

Although ASML's Q3 earnings outlook and the logic of switching styles of U.S. chip stocks driven by the expected interest rate cut also caused the sharp decline of chip stocks, market pricing since Wednesday clearly shows that the "understand king" speech is more lethal, and Wall Street has begun to price in the possibility that Intel may be one of the biggest winners after the "understand king" takes office. Since Wednesday, the Philadelphia Semiconductor Index (.SOX), known as the "global semiconductor stock wind vane," has plunged 7% in two days, while Intel's stock price, which has been languishing this year, has rebounded by nearly 15% since July, while the Philadelphia Semiconductor Index has fallen by more than 2%.

Both Intel and Geshen (GFS.US) are domestic chip manufacturers in the United States, but unlike Intel, which focuses on the 10nm and below high-end process, Geshen focuses on mature processes. However, Geshen's stock price has also recently seen a counter-trend growth, particularly in the midst of Wednesday's sharp drop in U.S. chip stocks, Geshen surged nearly 7%.

Intel's recent strong upward trend has attracted more and more attention from investment institutions. In their view, Intel's stock price has quietly embarked on the "long bull road" since the moment Trump was shot, making it one of the most promising 'understanding king' concept stocks. Northland Securities recently released a research report maintaining a 'buy' rating on Intel and a target price of $68 in the next 12 months (Intel closed at $34.870 on Thursday).

Global Equities Research is even more aggressive, seeing Intel rising to $100 in the long term. Global Equities says that high subsidies from the U.S. government will fully help Intel achieve its ambitious goal of becoming a leader in high-end chip outsourcing and help Intel become a global leader in the field of manufacturing 'next-generation AI chips' in the future. Global Equities says that Intel's 18A, 14A and 10A are the most advanced chip processes, which are crucial to the future mass production of AI chips with higher performance for chip giants such as NVIDIA and AMD.

Intel's Ambition: AI PC and Chip Manufacturing Dreams

From the perspective of performance expectations, occupying a core dominant position in the AI PC field, which is expected to lead a new wave of consumer electronics replacement, as well as Intel's 'outsourcing dream' in the high-end chip process field, may be important catalysts for promoting Intel's long-term performance expansion trend and bullish stock price trend.

Melius Research, a well-known investment institution on Wall Street, recently released a report saying that the stock price of AI "latecomers," such as Intel, AMD, IBM, and even Apple, may start to catch up with the absolute leaders in the field of artificial intelligence such as NVIDIA, Microsoft and Google, sparking a new frenzy of 'AI investment.'

Here, "latecomers" do not refer to their lagging development in the underlying technology of AI, but to their later development in a specific field, far less market share than the industry leader, or a stock price lagging behind the leaders. For example, although Intel has little share in the data center AI chip market, it may boost Intel's valuation by participating in the AI PC layout with x86 ecosystem advantages and entering the chip manufacturing field.

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' view, AI PC may be an important catalyst for Intel's sustained stock price rise. Intel has been deeply involved in the x86 architecture CPU field at the PC end for decades, and has a powerful software and hardware developer ecosystem, supply chain cooperation system and a huge loyal user group in the PC field.

Since this year, the two major x86 architecture CPU giants, AMD and Intel, have been stepping up their efforts to layout AI PCs, and Qualcomm has also entered the AI PC field in a big way by launching a high-performance central processing based on ARM architecture Unit to accelerate AI reasoning tasks. At this year's Computex conference, AMD CEO Dr. Su invited a series of partners to the stage-from Enrique Llores, CEO of HP, to Jonney Shih, chairman of Asus-to discuss the use of AMD's new Ryzen AI 300 series processors on their upcoming AI PCs, and these PC vendors also said this year that they will configure Intel's new processors AI tailored for AI on the CPU.

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%.

Regarding Intel's advanced process chip foundry business that is transforming into a 'global chip foundry factory,' the company expects that the overall operating loss of its foundries will peak in 2024 and plans to achieve Non-GAAP gross margins of up to 40% and Non-GAAP operating margins of up to 30% from now until 2030. Intel CEO Gelsinger recently said that he is willing to manufacture chips for any company, including long-term competitors NVIDIA and AMD. Gelsinger predicts that by 2030, Intel will become the world's second largest chip foundry business by meeting the huge demand for AI chips, with a scale only slightly smaller than that of foundry king TSMC.

Gelsinger also said that the company's business transformation is going smoothly and that it will be 'one step ahead' of its competitors in the chip manufacturing industry by achieving more advanced 18A process nodes, which will bring Intel back to parity with competitors in terms of costs. '18A' and other chip manufacturing categories refer to Intel's planned 1.8nm-level chips and 3D chiplet advanced packaging technology roadmaps.

Global Equities Research sees the chip contract manufacturing business of Intel's imagination space as bullish for Intel's core logic of rising to $100. "The $8.5 billion of free government funding is a very optimistic start. But in addition, Intel has planned a chip manufacturing company capable of producing higher-performance 'next-generation' AI chips based on 18A, 14A, and 10A process technology, and Intel's high-end chip manufacturing and 3D advanced packaging are necessary technologies to accelerate the development of AI technology," Global Equities wrote in a report.

In addition to Intel's 1.8nm chip contract manufacturing expected to lead competitors, Intel's leading Foveros advanced packaging technology over TSMC and Samsung is also the core logic of Global Equities' bullish outlook for Intel to win more orders in the AI ​​chip contract manufacturing field. From a technical perspective, Foveros is ahead of TSMC's 2.5D CoWoS technology. Foveros, a 3D advanced packaging technology called Foveros, is a novel chip stacking solution, and AI chips are expected to be the largest application target of this technology; Intel's This technology can make the computing blocks of the processor stacked vertically, rather than side by side. Intel said that its planned 3D Foveros packaging capacity will reach four times the current level by 2025.

The current demand for AI chips is extremely strong, and it may be so for a long time in the future. TSMC management said at an earnings conference on Thursday that advanced packaging for CoWoS required for AI chips is expected to be in short supply until 2025, and there may be a slight relief in 2026. At the “Advancing AI” conference, Nvidia's strongest competitor, AMD, expects global AI chip market size to reach $400 billion by 2027, up from the previous expectation of $150 billion, while the AI ​​market size in 2023 is expected to be around $30 billion. The well-known investment institution I/O Fund estimates that the total potential market size of the global AI data center market in 2027 will reach $400 billion, and it is expected to reach a staggering $1 trillion by 2030.

The prosperity cycle is still continuing! The crazy rise of chip stocks may not be over yet.

Although the financial market has begun to regard Intel as the "conception stock" with the greatest potential for growth, Intel, which focuses on PC chips, is still fundamentally a very pure chip stock, and its expected long-term bullishness behind the stock price is also inseparable from the strong support provided by the up-cycle of the chip industry prosperity.

This wave of chip industry recovery led by AI chips is increasingly clear. Data recently released by the Semiconductor Industry Association (SIA) shows that global semiconductor sales totaled $49.1 billion in May 2024, a significant increase of 19.3% year-on-year and a 4.1% increase from the previous month. Regarding the expected semiconductor industry sales in 2024, SIA President and CEO John Neuffer expects overall sales to achieve double-digit growth compared to 2023 in a data report.

When the scale of server AI chip deployment for processing massive parallel computing meets the basic computing power requirements and basic performance support, according to the technological development trend, large-scale AI models are inevitable in consumer electronics such as smartphones, humanoid robots, electric vehicle software systems, and industrial production Application terminals, that is, edge AI. TSMC management emphasized on Thursday that almost all of TSMC's chip customers hope to add large AI models on the edge. Compared with cloud AI, edge AI, which has significant advantages such as high efficiency, speed, and personalization, is more in line with actual consumer needs. According to the technology roadmap of the chip manufacturers, AI chips in application terminals such as PCs, smartphones, and smartwatches will have CPU as the core, integrated with NPU and GPU technologies. This means that the replacement demand for consumer electronics chips will soon be handed over to the data center server chips, ushering in an explosive demand. Allied Market Research predicts that in terms of chip type, CPU-based application terminal AI chips will account for the majority of the global AI chip market.

Therefore, as large-scale AI models on the edge are incorporated into everything, it means that not only the demand for AI infrastructure- that is, data center AI chips, will surge, but also the renewals and updates of central processing units, storage chips, MCUs covering electric vehicles, and analog chips covering the industrial industry, which have CPU as the core, as well as the needs for PC, smartphones, smartwatches, and humanoid robots, etc., are expected to usher in an upsurge since 2024. Nomura, one of the world's top financial institutions, recently released a report stating that as the cyclical technology recovery expands into other consumer electronics terminal markets, it will support the entire chip industry to enter the next upswing cycle of prosperity and is expected to fully continue from the second half of this year to 2025. Nomura expects global chip sales to show a strong growth trend in the coming months. It is expected that the cycle recovery of terminal chip markets driven by AI chip demand will expand from AI ​​servers to traditional servers, PCs, and core CPU chips for smartphones and electric vehicle MCUs.

The hype of chip stocks is not over, and the development of AI chips is still in its infancy. As demand growth, innovative advances, and geopolitical changes continue to affect the competition and market Landscape of the global semiconductor industry, the coverage and impact of the prospects of various chip sectors remain to be seen.

The surge in demand for semiconductor products in various applications will last for a long time in the future. To promote the development of the chip industry while meeting the increasing demand for products, institutes must focus on the research and development of new technologies and materials, and their success largely depends on how fast and effectively the technology and materials can be implemented in the semiconductor industry. At the same time, countries must also step up cooperation to encourage technological innovation in the industry. Only in this way can we jointly promote the orderly development of the global semiconductor industry.

According to a research report released by Bank of America on Wall Street, the current semiconductor industry recovery cycle began at the end of 2023, and is currently only in the third quarter, which means that the strong recovery trend may continue until mid-2026. Bank of America analysts pointed out that after experiencing an extremely depressed downward cycle, the semiconductor industry usually welcomes a 10-quarter prosperity cycle, and this model has just begun.

The latest semiconductor industry outlook data released by the World Semiconductor Trade Statistics Organization (WSTS) shows that the global semiconductor market is expected to show a very strong recovery trend in 2024, and WSTS expects a significant increase in the sales scale of the global semiconductor market for 2024 compared to the forecast report at the end of 2023. For 2024, WSTS predicts a market size of $611 billion, which means a significant increase of 16% compared to the previous year, and a significant upward revision from the forecast at the end of 2023.

According to WSTS, the expected revision for 2024 reflects the strong performance of the past two quarters, especially in the calculation terminal market. After a significant market contraction in 2023, WSTS expects that the sales revenue of two core chip product categories will drive double-digit growth in 2024, one is the total sales revenue growth of the logic chip category including CPU and GPU, which will increase by 10.7%, and the other is the storage chip category dominated by DRAM and NAND, which can best reflect the chip cycle, and is expected to skyrocket by 76.8% in 2024.

Looking forward to 2025, WSTS predicts that the global semiconductor market sales scale is expected to reach US$687 billion, which means that the global semiconductor market is expected to increase by about 12.5% on top of the already strong recovery trend in 2024. WSTS still expects that this growth will be mainly driven by the storage chip category and logic chips. It is expected that under the promotion of the AI wave, the overall scale of these two categories will soar to more than US$200 billion in 2025.

Editor/Lambor