European Asset Management Giant Invests Heavily in NVIDIA on Dips: NVIDIA's Value Still Undervalued

According to the financial news app Zhitong Finance, NVIDIA (NVDA.US), which has long dominated the AI chip field in data centers and is referred to as the "most important stock on Earth" by Goldman Sachs, became a target of deep selling in the market in the second half of this year. However, the European asset management giant Impax Asset Management is quietly seizing the significant opportunity to "buy on dips," establishing a position in NVIDIA stock that the institution has regretted not holding for a long time.

The asset management company, headquartered in London, manages a total of $50 billion in assets. Its CEO and founder Ian Simm stated that he and his investment team have long been looking for an opportunity to correct a major mistake they realized - that the institution missed out on NVIDIA's shocking 800% epic surge since early 2023, failing to capture the up to 800% return from the soaring value of NVIDIA stock.

"We did underestimate the massive market potential of their hardware products in the past." Simm recently stated in a media interview. Impax has been seeking the appropriate way to follow this unprecedented AI investment frenzy, but NVIDIA was "expensive." "That is to say, it was only when it was sold off that we had the opportunity to enter this field."

Since the second half of this year, NVIDIA's stock price has experienced a sharp decline at one point, leading to its market value plunging from its peak to the bottom, with the market value shrinking by nearly $1 trillion. However, the significant pullback in NVIDIA's stock price has provided Impax, which missed out on NVIDIA's epic surge, with an excellent opportunity to buy on dips. Although most of the deep declines in NVIDIA's stock price have been recovered, Simm believes that the tech giant's current market value of over $3.2 trillion is still severely undervalued, stating that its actual value is definitely more than this figure.

NVIDIA's stock price once sat firmly on the throne of the "world's highest market cap listed company" this year, but in the second half of this year, it entered a correction phase due to the unclear prospects of AI monetization and global macro policy shocks, with the stock price experiencing a sharp decline at one point.

Founded in 1998, Impax is best known for its role as an institutional investor in the green transition. Among the many asset management companies focusing on transitioning to a more sustainable economy, it has become a rising star in the asset management industry. Different from the strategy of most Wall Street asset management institutions that excel in chasing market hot trading trends, Impax has long focused on green transition investments. However, as the AI investment frenzy sweeps the globe, this conservative European asset management giant has also begun to pursue this trend to achieve stronger asset management returns.

In recent years, rising interest rates, the energy crisis caused by the Russia-Ukraine conflict and deteriorating geopolitical situation in the Middle East, as well as the comprehensive rise of the so-called Magnificent Seven tech giants in the US stock market, have made green investments almost a complete failure. Due to the continued poor performance of stocks related to renewable energy, Impax Asset Management's own stock price has fallen by nearly 30% in European stock markets this year, while the S&P Global Clean Energy Index has also fallen by over 10%. Meanwhile, the US benchmark S&P 500 Index has risen by over 20% during the same period, continuing the bull market trend since 2023 driven by the AI frenzy This $50 billion asset management giant strategically invests in NVIDIA

Earlier this week, the results of Impax's performance report showed that as of the end of the fiscal year on September 30, the stock gains owned by this asset management giant were approximately £5.3 billion (about $6.9 billion). However, this is still lower than the £5.8 billion net outflow suffered by Impax during the same period.

Him, in an interview, stated that Impax is learning from the past few years and paying more attention to large tech companies such as NVIDIA and Microsoft, as it seeks undervalued market opportunities to generate greater returns.

"To be frank, our main investment strategy has underperformed in the past few years because we tend to achieve growth at reasonable prices, staying away from the hype and speculation surrounding investments in large US tech companies," he said.

According to data compiled by institutions, during a significant drop in NVIDIA's stock price in June, Impax indeed strategically bought NVIDIA stocks with real money, trying to seize the global AI investment frenzy. The data shows that Impax's holdings of this chip giant increased significantly from just 1.4 million shares at the end of the first quarter to 4.9 million shares by the end of June, more than doubling. This data has been officially confirmed by Impax.

Him has repeatedly stated in recent media interviews that considering the expected prosperity of artificial intelligence driving a fervent demand for its AI GPUs, Impax still believes that NVIDIA's value is severely underestimated.

Him stated that holding NVIDIA stocks is also reasonable from a climate and green transformation perspective, as like other tech giants, NVIDIA's core hardware products will also require a large amount of renewable energy to drive its growth in the future. He mentioned that with the increasing demand for renewable energy, tech companies like NVIDIA developing more efficient chips and AI large models will be more favorable to the global environment and the trend of green transformation.

At a major event earlier this month, NVIDIA announced that it will begin mass delivery of its new AI GPU architecture, Blackwell, to large customers such as Amazon and Microsoft in the fourth quarter of this year, optimized to develop OpenAI's GPT-4 AI large model with only 3 gigawatts of power, down from the 5500 gigawatts required a decade ago. "NVIDIA's energy-saving capabilities make its stock more valuable," Him said.

Impax holds NVIDIA shares in five classic strategies and different funds, including its "Global Opportunities Portfolio," which is limited to only 40 stocks consisting of companies with diversified business models operating in high-growth markets and not "overly favored by the market for any reason." Him mentioned that Microsoft (MSFT.US), part of the "Magnificent Seven" camp, is also included because Impax believes that "under the long-term trend of continuous iteration and development of AI technology," Microsoft's actual value is underestimated.

As a major shareholder of OpenAI, Microsoft has embedded flagship AI large models such as GPT-4, which OpenAI is proud of, into its flagship applications such as the Office suite and the Microsoft Azure cloud platform, becoming the absolute leader in AI application terminals globally, with performance and stock prices continuously growing since 2023 Once firmly seated on the throne of "the world's highest market cap listed company". However, Heim believes that Microsoft's current market cap of around $3.1 trillion is still undervalued.

In fact, the entire global "industrial space" now appears to be undervalued, Heim said. He stated that as the possibility of a "soft landing of the U.S. economy" increases, this situation may change, which will help restore global investor confidence. "Capital costs are rapidly decreasing, consumer sentiment is stabilizing, so stock investments are looking more attractive," Heim said.

A series of heavy positive news recently pushed NVIDIA's stock price quietly close to its all-time high

NVIDIA CEO Jensen Huang stated at an event in early October that the demand for Blackwell architecture products in the market is "very crazy". Recently, many global technology companies have been unable to avoid showcasing NVIDIA's cutting-edge AI GPU servers in demonstrating their business progress. Coupled with Citigroup's optimistic forecast for data center spending, NVIDIA's stock price has been approaching its historical high this week.

At a time when global stock markets are fluctuating at high levels, NVIDIA, the dominant AI GPU leader in the AI infrastructure field, has quietly risen to near its all-time high. Before NVIDIA's stock price fell on Thursday, it had been on a strong upward trend for 5 consecutive trading days. On Tuesday, it surged to as high as $133.480 during U.S. trading hours, with a 5-day cumulative increase of 14%, getting closer and closer to its all-time high of $140.747.

Taiwan-based high-end electronic product contract manufacturing giant Foxconn held its annual Technology Day on Tuesday, revealing that the company is building a large artificial intelligence server manufacturing infrastructure in Mexico to meet the booming demand worldwide for NVIDIA's latest GB200 AI GPU hardware system.

Foxconn Chairman Liu Young-way stated at the conference that, as NVIDIA CEO Jensen Huang mentioned, the demand for the most cutting-edge AI servers - equipped with Blackwell architecture AI GPUs - is very crazy, and the production capacity of the company's Mexican factory will be huge. The company is also using NVIDIA's Omniverse digital twin application software to build a highly automated large manufacturing facility in Mexico, using AI to create a factory that produces AI servers.

Almost at the same time, Microsoft's Azure cloud computing service platform "showed off" that the tech giant has already obtained NVIDIA AI server systems equipped with the GB200 AI GPU. The Azure cloud platform even emphasized that it is the first large tech company among global cloud computing service providers to successfully equip large-scale Blackwell architecture AI GPU server systems.

According to the latest forecast data from Citigroup, by 2025, the data center-related capital expenditures of the four largest tech giants in the United States are expected to increase by at least 40% year-on-year. These massive capital expenditures are largely linked to generative artificial intelligence, meaning that the computational power demand for AI applications such as ChatGPT remains significant. Citigroup stated that this implies that the tech giants' spending on data centers is expected to continue to expand significantly beyond the already strong 2024 spending scale, and the institution expects this trend to continue to provide very heavy positive catalysts for the stock prices of data center AI GPU leader NVIDIA and data center interconnect (DCI) technology providers Recently, NVIDIA, which has seen "five consecutive increases" in its stock price, is gearing up to make a push towards new highs.

In a research report, Citigroup referred to the four major tech giants as the global cloud computing giants Amazon, Google, and Microsoft, along with the social media company Meta Platforms, the parent company of Facebook and Instagram. In this latest research report, Citigroup predicts that by 2025, the data center capital expenditures of these four major tech giants will increase by 40% to 50% year-on-year. Citigroup and other major Wall Street banks remain bullish on NVIDIA, with a general consensus that NVIDIA's stock price is expected to break through the $150 mark in the next 12 months.

The current demand for AI chips is incredibly strong, and this is likely to continue for a long time to come. TSMC's management recently stated at an earnings conference that the supply-demand situation for CoWoS S/L/R advanced packaging capacity required for AI chips is expected to remain tight until 2025, with a slight easing possible in 2026. In addition, the latest quarterly sales figures released by TSMC, the core chip manufacturer for NVIDIA and Apple, for the quarter ending in September totaled NT$759.7 billion (approximately $23.6 billion), exceeding analysts' average expectations of NT$748 billion. This indicates that TSMC's overall sales in the third quarter increased by 36.5% year-on-year, significantly surpassing TSMC's forecast range in July, demonstrating that the demand for chips, the most essential infrastructure for artificial intelligence, remains very strong