2024-05-17 11:17:56 ET
Summary
- Fabrinet's stock surged by over 157% last year, outperforming the Nasdaq-100, but experienced a decline in March, possibly due to Nvidia's announcing a preference for copper for connecting its latest Blackwell GPU.
- In contrast, the demand for Fabrinet's optical communication products has skyrocketed due to the increased prevalence of AI applications in data centers.
- Despite potential risks from Nvidia's technological changes, Fabrinet should continue to benefit from strong demand for 800 gigs interconnects as AMD ships GPUs this year, making it a buy.
- With robust demand comes pricing power meaning that the EPS should also benefit.
- There should be volatility next week following Nvidia's earnings call as investors focus on the "fiber versus copper" debate, providing a better margin of safety for those willing to invest.
Fabrinet's ( FN ) stock surged by more than 157% last year, beating the tech-heavy Invesco QQQ Trust ETF ( QQQ ) by more than 100% as shown in the chart below. This is mostly because of the market pricing in AI-related prospects, but things seem to have changed from March this year, illustrated by its orange chart underperforming NVIDIA Corporation ( NVDA ) in purple....
Read the full article on Seeking Alpha
For further details see:
Fabrinet: Sustained Demand For AI Networking But Expect Volatility Next Week