Lynx Equity Strategies analysts said in a Friday note they believe investors should buy Apple (NASDAQ:AAPL) shares and trim their exposure to Nvidia (NASDAQ:NVDA) ahead of the Nvidia GTC (GPU Technology Conference) later this month.
“If AI is to become all-pervasive, the likes of AAPL and GOOG necessarily have a role to play,” the analysts said in the note.
“At some point of time, AAPL/GOOG need to stop being source-of-funds, however frustrating has been the optics provided by their respective management teams,” they added.
The remarks come after Taiwan Semiconductor’s (TSM) earnings report, which the analysts think offers enough reason for investors “to conclude AAPL cannot be given up for dead, and no longer an easy source of funds for the NVDA trade.”
Investing in NVDA and AMD (NASDAQ:AMD) ahead of the AI-focused GTC event, while using the so-called AI-laggards like AAPL and Google (NASDAQ:GOOGL) will be a popular move among investors, the analysts commented. That’s because this has been a profitable strategy throughout the year.
However, they noted a sudden, unexpected shift in this trend as NVDA and AMD dropped from recent highs despite positive reports, without clear fundamental reasons.
NVDA and AMD fell 5.5% and 1.9% on Friday.
Overall, the analysts voiced concerns that the broader industry may struggle to match Nvidia's growth pace, potentially challenging the patience of investors used to its rapid expansion.
They also questioned the feasibility of AI becoming “all-pervasive” without the significant participation of mobile giants AAPL and GOOGL.
“Perhaps they are behind that ball. If so, are investors willing to bet that AI could make real traction in global applications powered on by just one hyperscale cloud provider – MSFT?” they wrote.
“The AI revolution is upon us, for sure. It will become part of our daily lives. We are merely pointing out the inconvenience of the time and resources it takes to take the revolution global.”
“The revolution simply cannot happen on a meaningful time scale without the participation of AAPL and GOOG. If they are laggards, so be it,” the analysts concluded.