Applied materials, Nvidia, Apple & Fortnite: Trendticker

00:00 Speaker A

It is now time for some of today's trend kickers. We observe applied materials, apple and nvidia. First of all, applied materials, lack of sales estimates and the output of a disappointing view that today send lower stocks. The company feels the pain of export controls to China, the largest market for foreign materials. I am still accompanied by Victoria Fernandez Crossmark Global Investments Chief Market Strategist for more. I wonder, Victoria, that's the question that people want to know how Amat can be a signal for Nvidia that will be here in the future. To what extent is that part of the pressure that Amat felt unique for you is about a broader concern?

00:40 Victoria Fernandez

Well, we know that the space of the semiconductor system is really the largest intake component for amat. So I can see why if you worry about export controls, why this will be a great success for you. And especially when you look at China, we'll see in the last quarter, it was what came from China over 40% of her sales. They look at the income that we have just received from them and they look at around 20, 25%. So a great success for you. I think you can say that this would also turn into other semiconductor names in Nvidia. But to this extent I only know there because of the insert component. How will that go forward? And I think the problem is that these export controls change it weekly, right? Every few days you will receive a new heading with how it will look. We had the diffusion component, right? Then say: Wait, we will set new controls from next week. But you see someone like a LAM research that can be a competitor of Amat, and you are actually double digits this year. I think we have to watch the room and see how it flows through to other companies, but it is obviously a roadblock for many companies when it comes to China and export controls.

02:30 Speaker A

Yes, and certainly a memory to really observe these guidelines while they continue to develop. Next time let's talk about Nvidia. You would like to build a research and development center in Shanghai if the export components reached sales. According to reports from Financial Times. Jensen Wong, CEO of Nvidia, reportedly discussed plans with Shanghai's mayor in a meeting when he visited China last month. The stock rose by 7/10 percent, but it is interesting Victoria. After Jensen Wong was in Saudi Arabia and obviously talks about building the largest data center outside the USA in Abu Dhabi. Is this a signal that Jensen diversifies its portfolio worldwide in terms of opportunities? What does it tell you?

03:27 Victoria Fernandez

Just as we talked about how customers have to diversify their portfolios. I think it makes sense that a company does the same. And they look at China that corresponds to 13% of the sales of Nvidia, and he says: How do I still have present here? What can I do to generate the income that we need from there? It is a big market for you. So if you set a research and development center you say there will be different things. Global projects will be that they work on autonomous cars, different things like this, and nothing will be related to IP in the USA. We'll see if that works. You already have 2,000 employees in Shanghai as it is. You have a presence there, but he has to find a way to keep his presence in China. And I think that's a way he does, and hopes that at the same time he likes the things we see in the Middle East and he will continue to make some progress there.

04:46 Speaker A

Yes, a lot of chess movement when it comes to geopolitical space at the moment. But finally here, we go to epic games that are extremely popular. It is now not available on Apple devices worldwide. Apple blocks the company's offer to use the game in the App Store again. The memory, Fortnite, was originally pulled out of the App Store in 2020 after trying to bypass the 30% fee of Apple for in-app purchases. Epic Games submitted Fortnite to Apple's US App Store last week after a judge decided that Apple could not charge a commission for these purchases. They only reduced Apple about two tenths of percent, but it is fascinating and of course lets me think about the broader regulatory challenges with which Apple is currently confronted.

05:42 Victoria Fernandez

Yes, I have the feeling that my son should be here to answer the questions about this game segment, right? Exactly. But I mean you are looking for sales of 350 million US dollars that Apple will lose through this component. And they are under great pressure. I mean, we had some comments on Apple made this week. I am talking that you don't want a building in India and Apple tries to set more money for working in the USA. But the regulatory effects will be great. We saw it in the share price. We saw it in the income that come out. And so I think that Apple will continue to fight a little and have to find ways to work with these companies to keep the production. At the same time, they have to work within the regulatory limits that they have.

06:55 Speaker A

Yes, 300 million plus, it may not be a bin for a company like Apple, but it is just another headwind that you don't have to deal with.