Two chipmakers now drive a third of America's earnings boom
Nvidia and Micron Make Up 34% of America's Earnings Boom
A Wall Street Journal analysis argues that the earnings boom behind recent US stock market gains rests on just a handful of companies, with Nvidia and Micron alone accounting for 34% of the growth. The concentration raises questions about how much of the market's strength depends on a narrow slice of the semiconductor sector. The Hacker News discussion drew only a couple of comments.
The earnings boom is heavily reliant on just a handful of stocks.
- bagacrap
So someone correct me but I think this is sort of an accounting trick. When Microsoft buys an Nvidia GPU for $100, it will claim that it lasts 5 years, so writes down $20 in the expense column for this year. Meanwhile Nvidia takes all the profit at time of sale, $100. So for each GPU bought, SP500 logs $80 of profit, even though no money entered or left the SP500.
(Yes of course the GPU cost something to make, but the margins on these things are very high. The point is that revenue is immediate while capital expenses are amortized. And capital expenditure has gone way up lately.)
- Good4boothee
I just want to remind everyone that SK Hynix was once able, on its own, to bring average yearly growth for entire South Korea economy down to zero.
- foota
In theory if people are giving all of the money to Nvidia, then it's because they find it valuable (in this case companies purchasing GPUs) so even if the GPUs weren't so expensive in theory there would still be economic value derived from the transactions.
- cyanydeez
Aka, inflation.