He'll take on all of this. Jordan, you wrote your note this morning, really actually highlighting the painful reality for Intel, that in one week alone, a company such as Broadcom will add twice the market capitalization of Intel. How are you thinking about the news coming from what was the key chip manufacturer of ten years ago? Yeah, well, thanks for having me. I mean, I would agree with Ian's summation that this is an important bit of positive news. Intel needed something to kind of help the stock and sentiment. So I think on one side, it's at least an affirmation that, yes, they have this foundry business, they've won an important cloud customer on Amazon. But basically, we don't really know enough on the volume and the timing of when it would actually drive revenues for them. And I think now the stage is set for them to hopefully go out and start adding more customers to the mix.

whether that's, you know, the biggest and the best would be in video, but they could get others as well. And that's going to be a very steep hill to climb. But they got to start somewhere. And that's what today was biggest and the best in video. Are investors still feeling that that's where they should be allocating the chips more broadly? Chip making is where they should be putting money in this time in the market. Well, that's a really good question. I think people are a bit mixed on how much more exposure to semiconductors they want and need at this time. The group semiconductors, that is, is extremely sentiment-driven. So when it's performing well, it's got the momentum. People are generally very happy to ride the wave. And that's what you saw all first half of 2024. It was like a fear of missing out led by and video.

As soon as we hit the highs in the first part of July and the group sold off, I think investor sentiment shifted. People were worried this group is ahead of fundamentals. The valuations were stretched, and it was time to look outside of semis to areas like software or large-cap Internet. And that's kind of where we are now. I would say the last thing is that the investor feedback in semis is quite mixed, even though the group is still up a lot this year and the stocks act relatively well, not a lot of them are making new highs. And the fundamentals, meaning what these companies are saying, particularly outside of NVIDIA and GPUs for AI, is actually not improving. In some instances, it's deteriorating a bit like the auto and memory sector. Away from the idiosyncratic Jordan, what did the Intel story tell you about this investment cycle? And three-part lens, those potential customers and where they might be going? Well, it tells me a couple of things.

It tells me that, one, these large cloud hyperscale customers like Amazon, Google, Facebook, sorry, these large cloud customers are very interested in building and designing their own custom chips. As you pointed out early in the show, this is more of a fabric and networking chip. But keep in mind, Amazon is very big at building and designing their own chips for training and inferencing, as opposed to relying too much on NVIDIA. So I think that's going to continue. All these big cloud companies with large CapEx spending budgets will seek to do as much as they can internally with the help of other leading design companies like Broadcom, Marvell, maybe Intel, and others. It also shows that there's really no end in sight here. I think that they're going to look to diversify if they can, beyond just building all these chips with Taiwan Semi, who's the world's leading foundry. But they don't want to be too reliant upon them or give TSM so much leverage.

that they can keep raising prices. So, they kind of want to keep the industry balanced and honest, so to speak. And that would be at Intel's advantage if they can show and prove they can execute at these very advanced leading-edge nodes. Jordan. I don't know what you're doing on Wednesday afternoon, but here we'll be focusing on the next FOMC decision. You're somebody whose desk is just every day flowing with technology news, essentially. So, how do you and all the people that phone you at 5 a.m. think about the Fed tomorrow? Well, I think half of them, like myself, just want it to be behind us so we can move on and focus more on fundamentals as opposed to the Fed and the macro. I tend to think this one is one of the more important Fed decisions and announcements that we've had in some time. But it also feels like a little bit overhyped in terms of are we really is

the market really going to change dramatically, whether it's 25 or 50 basis points? Are institutional investors and big mutual fund managers going to dramatically change the makeup of their portfolio based on 25 versus 50? I don't think so. I think they're already of the view that whether it's 25 or 50, the Fed is going to continue to probably air on the side of wanting to ease as opposed to keep rates high. And with that backdrop, as long as we can believe in a soft landing, which I think most investors do, they're going to probably stay long equities and they're probably going to continue to look for growth. And that's going to favor key parts of tech. So bottom line, I think when the dust settles in a week, the fundamentals and the backdrop for tech still remain pretty favorable. Does it still favor the most valuable companies? I think Microsoft today once again

having money back in terms of buybacks, promised dividends given, but it's so valuable already. Do the sentiment stick with it. Oh, yeah. I definitely think that there's no deterioration or weakening in positive sentiment for these Mag seven, you know, particularly these names like Microsoft and Nvidia, Amazon, and the companies that are perceived to be the leaders in both Cloud and AI, even Apple. I mean, it's down a bit the last few days, but to be to be honest, like if I on the smartphone is going to work, they're going to be leading the charge, and I just don't think you can get that exposure, that potential growth in other areas of tech and actually probably not in other areas of the market. The debate's going to be what do you pay for it? And that's hard to determine. It's more of an art form than a science. But as long as rates are coming down and

the is not grinding to a halt. I tend to think people will pay up for growth. And that favors these large mega caps as opposed to the smaller companies that are going to have to see if the economy holds up or not.

Mizuho's Klein on Intel's AWS Deal: It Needed Good News

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Mizuho's Klein on Intel's AWS Deal: It Needed Good News

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