Daily Brief TMT/Internet: NVIDIA Corp, Taiwan Semiconductor (TSMC), Softbank Group, Torex Semiconductor, Aviat Networks and more

• Mega cap stocks like Nvidia, Alphabet, and Microsoft surpass lofty market expectations, in the latest earnings season leading to continued rallies. 
• Profits from AI innovations are accumulating predominantly at the bottom of the supply chain, benefiting large hardware and cloud service providers. 
• Smaller tech companies, including Salesforce, MongoDB, and Dell, have experienced sharp corrections due to lofty expectations and their limited capacity to generate significant AI revenue.

• Former TSMC R&D director Konrad Young advocates for a partnership between Taiwan and the UK in quantum technology.
• Chinese car brands attract young Thai consumers with innovative smart cockpit features, winning over the market.
• Xiaomi implements strategic changes in India after a decade of entering the market, adapting to new trends and demands.

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

• Softbank Group

• While current underlying demand has yet to show signs of a strong recovery, progress has been made in inventory adjustments in the distribution supply chain, and TOREX expects a recovery in sales from the 2H of 2024, and the top priority for this term is strengthening sales expansion initiatives.
• Regarding the initial FY25/3 consolidated OP forecast, in addition to a contribution of ¥1,150mn from the +8.7% YoY increase in net sales, the decrease of ¥2,370mn in inventory write-downs in manufacturing cost of sales will drive a strong recovery in OP.
• Although capex is set to decline -31.9% YoY to ¥3,600mn (mainly for equipment being installed in the new Phenitec Kagoshima Fab clean room), having peaked out last term, depreciation will increase +27.7% YoY to ¥3,000mn as the new clean room has started operations. 

• Aviat Networks has successfully turned around its business in the telecom equipment sector despite challenges
• The company has outperformed larger competitors by focusing on execution during the COVID boom-bust cycle
• Despite investor caution due to competitive landscape and poor sector valuations, Aviat Networks’ fundamentals are strong and outpacing its stock performance, positioning it well for future growth

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.