• Semi-conductor   company Nvidia reported results for the first fiscal quarter of 2023. Revenue was up 46% annually to   R8.3 bn as demand for microchips remained robust in a supply constrained   market.

  • Nvidia said its graphics processors (used for gaming, artificial   intelligence in the cloud, and crypto mining) remained popular – with its   data center business growing 83% year-over-year to $3.75 billion, surpassing   the company’s core gaming business, which grew 31% year-over-year to $3.62   billion.

  • Gross margins improved by 90 basis points to a very impressive   67.1%. This helps absorb rising costs from a tough macroeconomic standpoint,   which are beginning to filter through into earnings, with operating expenses   jumping 35% year-over-year in the quarter.

  • Net income jumped 49% year-over-year to $3.4 bn, with EPS coming in   at $1.36, helping the company top estimates both on the top and bottom lines.   The company did incur a penalty when it terminated a deal to purchase ARM, a   British chip technology company, with Nvidia paying a $1.35 billion   termination charge for doing so.

  • To combat rising costs, Nvidia said it would slow its pace of hiring   and institute expense control measures. The chipmaker provided   less-than-sanguine guidance which saw shares fall on the news. It expects   sales of around $8.1 billion for the current quarter, below the $8.54 billion   analysts were expecting. It said supply had begun to normalize and that   gaming revenue would decline in the teens in the current quarter. It added   that the Russian war in Ukraine and Covid lockdowns in China are actually   helping boost sales by $500 million.

  • Shares are down over 41% year-to-date as investors shy away from   expensive, fast-growing, long-duration assets in favor of defensive value   stocks. We own Taiwan Semiconductor and Texas Instruments in the Cratos BCI   Worldwide Flexible Fund in this space. We believe current prices provide an   attractive entry point for long term investors looking for exposure to   quality players in the sector as the internet-of-things trend pervades almost   all aspects of our consumer lives.