The Billion-Dollar AI Bottleneck — Why This Tech Giant Controls the Future of Nvidia

0:00This is an iHeart Podcast. Guaranteed Human Earners, what's up? Look, building wealth isn't just about making money. It's about knowing where your money is working for you. That's why we partnered with Empower. Empower is all about helping you invest well so you can go out and live a little. Their free Empower personal dashboard gives you a complete view of your financial life in one place. Track your net worth, monitor your budget, analyze your investments, set retirement goals, and more. You've worked hard for your money. Now make sure it's working hard for you. Download the Empower personal dashboard or visit Empower.com.

0:37Not an Empower client paid or sponsored. When traveling for events or festivals throughout the country, every dollar matters. We compare flights, prices, hotel rates, and restaurant options. So why wouldn't we compare rides? Personally, I always check Lyft before booking a ride. Prices can change throughout the day depending on traffic, weather, and what's happening in the city. If you're headed to a concert, out to dinner, or catching up with your friends on a Friday night, taking a few seconds to check lift could leave you with more money to enjoy the experience. Save money. Check lift. Ernest, what's up?

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1:56Learn more at brex.com slash AF. Let's talk about SK Hynix. IPO this Friday, I believe. Big, big, big IPO. Something that's, a lot of people have different theories on this. Some people think it's going to really hurt Micron. Some people think that it's a sign that this memory sector is coming to a halt. because it's like when you start to see a lot of IPOs, it's like, let's get in while there's still room. Like, let's get as much as we possibly can before the gig is up. Some people say that this is just the beginning of the memory sector. And this is something that's encouraging. I don't know, Korean company.

2:46This is probably gonna be another billion dollar. I mean, trillion dollar. It's already there. It's on IPO. As soon as the first day out. This is like a SpaceX situation all over again. It's not as popular as SpaceX. Yeah. But this is going to be like a new SpaceX situation. I want to compare it to SpaceX in terms of, well, SpaceX is a new company that's IPO-ing and it had a$1.8 trillion violation. This is already a$1.1 trillion company that is IPO-ing to raise capital. obviously it's trading in South Korea. So the idea of raising capital, I get it from that standpoint. Well, why raise capital now?

3:30Well, they understand, and this is just my bull case on it. They understand that the moment, right? Like we saw that the demand for GPUs was a bottleneck. We've got that under control. Well, now the bottleneck is memory and they lead the world. Like I know we want to talk about Micron and we love Micron, But the world leader in high bandwidth memory is SK Hynix. And so the U.S. stock market is a place where you can raise capital and give exposure. Most people, if you've been watching this show, if you're in EYL University or if you're in Red Panda, you've already had exposure to SK Hynix, right?

4:07So if you bought DRAM, the ETF, that has a 24 % allocation. So you've already been there. The idea that now you can individually have access to it is a game changer. And so their goal, they expect to raise additional$29 billion. Well, why would they want to raise$29 billion? Because of the demand, right? They have to build new fabs. They have to expand the high bandwidth. What's interesting is that they're actually talking about advanced packaging. So that's something that's pretty interesting to me because when I think advanced packaging, I think Taiwan Semiconductor. So that talks about more demand in that space.

4:39But they're also directly going to start buying machinery, the EUV machines from ASML, which is, and we talked about that, that's a$400 million expense for one machine. So think about that. How many companies are even in the realm of buying one? So they're going to have multiple machines. They're expanding. They already talked about what they're doing in South Korea. July 10th, they're supposed to IPO here. How will it affect the memory sector? I think it's a clear indication that demand is still here. The memory sector is still going to be an issue or definitely a high concern over the next two to three years from what we saw from Mike Brown's report.

5:16I see Samsung just reported. I'll be interested to see how they did today. Obviously, they're doing a Cosby index. So they're in South Korea. And then this IPO Friday, it'll be a clear indication of, hey, either we're resetting the levels because the valuations are too high or we're going to match these levels and say, here we go on another run. So the idea of Samsung today or tonight or this morning, if you're watching, or on July 10th, which is Friday, SK Hynix IPOs, ASML will be reporting on Tuesday, TSM on Wednesday. The demand story will come to the forefront in the next five to seven days.

5:57And so that's what we should be watching for. And, yeah, for the people, yeah, people put in check, it actually is not an IPO. It's an ADR. So it's already a public credit company, but it's getting debuted to the American market on the American exchange. So it's not an initial public offering, but similar as far as people in America now have access to invest in it. But Ian, what's your thoughts on this? And what's your thoughts on the memory sector? How does this impact the memory sector? I think there's a lot of, and I went through this with NVIDIA, I'm sure you're going to agree. a lot of people who missed out on the memory run up are doing the michael bury and they're requesting a crash um so because you missed out you want these companies to fail when we're talking about let's say micron falls 50 what you want most people aren't going to buy at a 50 dip i think will micron lose some share i think it adjusts it'll be like nvidia and amd i think both are incredibly valuable.

7:01The other argument is there's so much interest in this one. I wonder what are the tech software companies doing to rebalance, to make their stock attractive again? Because now I'm seeing more of an American desire to invest internationally with more patriotism going to non-American companies. Even when I was at the World Cup with Zan, them high sense like we we need to have if we pick oh this is fine china's big three tech products versus our big three or shawty we was talking about this in atlanta like if they sold those byd cars here it would be over with for four tests so um do i think that there'll be a correction of some sort or an adjustment yes but do i think this company is incredibly valuable without a shadow of a doubt is um and the efficiency part like we can talk about bottlenecks but out of the ai boom the companies who really benefited were the ones who adjusted the business who really delivered a return on value for the enterprise customers and they did it great so um drama is going to benefit dramatically from it we talk a lot about ownership and one of the most important assets you can own is your digital real estate too many entrepreneurs rely on social media platforms they don't control.

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10:20And find the card that's right for you. Make sure you use our link so that they know Earn Your Leisure sent you. Terms and limitations apply. Subject to approval and eligibility, Built cards are issued by Column N.A., member FDIC, pursuant to license from MasterCard International Incorporated. When traveling for events or festivals throughout the country, every dollar matters. We compare flights, prices, hotel rates, and restaurant options. So why wouldn't we compare rides? Personally, I always check Lyft before booking a ride. Prices can change throughout the day depending on traffic, weather, and what's happening in the city.

10:55If you're headed to a concert, out to dinner, or catching up with your friends on a Friday night, taking a few seconds to check Lyft could leave you with more money to enjoy the experience. Save money. Check Lyft. if your best finance people are doing expense reports chasing receipts or spending time on month-end close it's time to get brex af a gentic finance that eliminates that work before it starts learn more at brex.com slash af my rule of thumb is the same wait six months there are no exceptions to that rule but i would definitely be looking for a price point to get into it after six or seven months for sure.

11:34I like the long term. But two things can be true, Rashad. There can be an adjustment in sector overall, but these two will be the superstars in that space for sure. These two, what, Micron and SK Hines? Yeah. I'll just add this because this is important too, right? So like, yes, if you're already in drama, you have exposure to it. The idea that this is a South Korean company, I'm glad you brought that up. And we know this administration is about making American companies the forefront of innovation. I'll say this, right? If you look at every hyperscaler, pick one. If high bandwidth memory doesn't perform or it can't execute at its function, these hyperscalers businesses will drastically suffer.

12:19NVIDIA won't be able to self-compute. Meta, Microsoft, Google, they all have the same issue that is needed and that's the memory. He texted me this over the week and I said, optimistically, obviously, but I'd be interested to see how fast, because I've already seen ETFs being built for SK Hynix already. Yeah, for sure. Every ETFs are being built. I'll be interested to see how fast VanEck puts SK Hynix into SMH and what allocation will be at. Those are the type of things you should watch, right? Will SOXX have exposure to SK Hynix and what allocation? That'll tell you the importance and the money.

12:59And so when you see this IPO, yes, retail investors have access. But the most important piece is that institutional firms now have access and can integrate them into their funds. And so that's what I'll be watching for as well. And above 8 % is like a key. Like if it's 8 % to 10%. Oh, they love it. Boy, boy, it's a home run. Home run. So for the leader in the space, which is Micron. They're not the leader in the space. Who's the leader? So SK Hynix is the leader. They're the number one high bandwidth memory company in the world. Samsung is number two. Micron is number three. Micron is the American leader.

13:37Yeah, this is like if one be performed in the finals. Well, okay. How you define it? Samsung, what's Samsung's market cap? It's like one point. They're all in the 1.3. That's crazy. Like they're all at number 12, 13, or 14 on the market cap list. Samsung market cap. Yeah, 1.9. Yeah. Trillion, right? Yep. Yep, yep, yep. So Micron, who just had a blowout earnings, historic actually, and is actually at a lower point now than it was when it reported earnings. And that's something that Bilal was talking about last week when he said like that's kind of a sign that that's not a good sign. When it's like expectations have already been baked in.

14:25when nothing that you can do can actually move the needle. And it moved the needle the first day, but it's been sliding back since. So, okay. If historic earnings have not increased the stock price, is that a sign of the times of what has been happening with stocks going lower after earnings and then they've gone up over the course of time? Or is it the beginning stages to say that the company is a good, they're solid and not like they're fluke companies but it's run up so much that the price increase has already been built in kind of like nvidia you could say you could make argument that's why nvidia hasn't moved because the price increase has already been built in if i can take this real quick everyone go and chat gpt o 'clock and ask what is the expected higher end return for every tech company on earth.

15:19Micron is going to be within a standard to deviation. NVIDIA is doing the same thing. Like the days of, like they're not going to have a four-year run where they get 2 ,000 % return. I think that's unfair to ask for. I think it will come to an attractive price point. But once again, when did 40 and 50 % returns in a year become failure? yeah like i don't like i don't understand the equivalent of like if a player scores 90 points in a game legit shot the bam but like legitimate 90 and then he goes back to scoring 37 it's like no he's not failing he's just calibrating to whatever his average is so i think in a world where they have blockbuster returns and this is a part of the rotation they're going to hunt for the next thousand percent return company there are not many to pick from so buy it at an attractive price um i do think expectations need to be modified but if anyone think that micron is going to fall apart overnight and that their story's over with you sadly mistaken you definitely are mistaken um i'll add this to it and that's why i think the historical data is important.

16:37And so if we watch what happened last quarter, it did the exact same thing. I think you touched on it a little bit earlier, Ian. When people miss a run, they're going to allow it to pull back to a point where it becomes even more attractive. So they should now buy into that. And so, yeah, it did blow its earnings, but it did that in Q1. And we watched it get down to 300. In fact, there were posts that were made about this. Maybe you guys remember. about the fall of it. And here we are at, you know, over 900 to 1000. Feeding flamingos, ain't it? Yeah, I mean, that turned into the flamingo fold, right?

17:14So, we can't have the short-term vision. I know it feels like, oh my gosh, like, guys, you're up 600%, you're up 400%. Like these type of numbers are not even like realistic for any type of - And we're talking about the stock. Not the option. Yeah, it's like, bro, what are we talking about? this company is not going anywhere. In fact, I have a new price target for it that is not getting anywhere under a thousand. So we just got to be mindful and be patient with it, right? We've already laid out the case for it. We understand that high bandwidth memory is going to be and continue to be in demand.

17:56We understand that it's sold out for this year and sold out for next year. The strategic partnerships, it's all laid out for you. The idea is, will you invest and will you hold it? and be disciplined about holding the position. Is your price point$1 ,600? It's right in that ballpark. It's in that ballpark. Yeah, not far. $1 ,500,$1 ,700. Yeah, it's in there. It's in that ballpark. Hold for the long term. Ernest, what's up? Look, building wealth isn't just about making money. It's about knowing where your money is working for you. That's why we partnered with Empower. Empower is all about helping you invest well so you can go out and live a little.

18:35Their free Empower Personal Dashboard gives you a complete view of your financial life in one place. Track your net worth, monitor your budget, analyze your investments, set retirement goals, and more. You've worked hard for your money. Now make sure it's working hard for you. Download the Empower Personal Dashboard or visit Empower.com. Not an Empower client paid or sponsored. When traveling for events or festivals throughout the country, every dollar matters. We compare flights, prices, hotel rates, and restaurant options. So why wouldn't we compare rides? Personally, I always check Lyft before booking a ride.

19:12Prices can change throughout the day depending on traffic, weather, and what's happening in the city. If you're headed to a concert, out to dinner, or catching up with your friends on a Friday night, taking a few seconds to check Lyft could leave you with more money to enjoy the experience. Save money. Check Lyft. Ask yourself, what are your best people spending their time on right now? Expense reports, receipt chasing, month-end close that takes weeks. You become what you spend on, and that's not what you're building toward. Brex is the intelligent finance platform that eliminates that work before it starts.

19:47AI agents that handle the manual stuff automatically, so your team can spend their time on what actually compounds. It's time to get Brex AF. Learn more at brex.com slash AF. Zach, nice vacation spot. But without T-Mobile 5G home internet, it's scary here. Don't open it. Relax. I ordered T-Mobile 5G home internet with same-day delivery powered by DoorDash. Nothing to be afraid of. We're saved. Get T-Mobile 5G home internet delivered the same day. Powered by DoorDash. Just 35 bucks a month with auto pay and a voice line. Plus taxes and fees. Same-day delivery for most internet eligible customers.

20:28to see if it's an option during checkout. This is an iHeart Podcast. Guaranteed human.