U.S. hyperscale "remains strong" into the end of 2022, with modest "pushbacks," but the first half of 2022 could see a potential slowdown.
He believes some hyperscalers could start to see a slowdown into the end of 2022 due to macro concerns.
His checks show hyperscale orders are seeing "pushbacks," but no cancels, with Q3 trending flat quarter-over-quarter and Q4 "potentially soft."
Rakesh said a Europe-China slowdown, Memory (DDR5), and PCIe Gen5 are key Server concerns as broad-based chip supply has improved considerably.
Rakesh lowered estimates for AMD "with macro headwinds clouding the near-term outlook."
He sees the strength in Data Centers slowing and adverse effects from the ban on sales into China affecting both companies near term.
Longer-term, he still sees AMD and NVDA as well-positioned with the push for more excellent Cloud, HPC, and AI workloads.
Just a week ago U.S. restricted sales of Nvidia's high-performance AI chips for servers, the A100 and H100, to China and Russia, citing national security concerns.
The U.S. also urged AMD to stop exporting its MI250 chips to China. The chipmakers' share prices and the iShares Semiconductor ETF SOXX came under significant pressure on September 7 following the embargo.
However, Rakesh saw that the restriction could provide access, focusing on a workaround as a priority over the next few months.
Price Actions: NVDA shares traded lower by 1.68% at $129.08 on the last check Thursday. AMD shares traded lower by 1.20% at $76.52.
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