SK hynix (SKHY) is reportedly in talks with Intel (INTC) to use the latter’s facilities to manufacture memory chips in the US for the first time
Yahoo Finance’s Jake Conley and Pras Subramanian are joined by RBC Capital Markets head of derivatives strategy Amy Wu Silverman to examine how the software industry is reacting to AI headlines, comparing it to the internet booms of the past.
So I want to attack this from maybe a slightly different angle. We got the news uh from Reuters this morning, SK Hynix reportedly considering an agreement with Intel to build chips in the US for the first time.
It seems to me there are two camps to the AI story. There is the kind of Dario Frontier Lab, call it doomerism if you want. And then there’s the enterprise case.
And no one’s really talking about spending slowing down at Microsoft or at Oracle or at AWS. You see SK Hynix. So how do you
how do you counterbalance the chip demand, build more capacity, demand is there, we have to make supply versus all the nerves we’re seeing from the people who are not in that business.
So, I’ll tell you, I mean, like if you think back to February, it was like SASpocalypse.
That’s right. SASpocalypse.
Like like like literally SASpocalypse.
You thought Salesforce was going to get vibe checked, right?
100% like it was like, think about doomerism, like we were like doomsdaying all of software.
That’s right.
And I remember at the time I asked myself, we did this study. I said, okay,
This is like a really close analogy, not perfect, but it’s a really close analogy to being like a newspaper company in 1998, right? Because
You saw the writing on the wall.
You did. You saw the writing on the wall and you said, holy crap, everything’s going digital. They’re not going to want like your New York Times, you’re a Dow Jones.
So what we actually did is we said, let’s just take those names and let’s actually see what happened to newspapers, um, CD companies, record companies, phone books. What actually happened to these companies? We had about 35 as the internet boom started.
And there were three really interesting takeaways. The first one is, on average, you actually made money if you stayed in them. Why? A lot of them were takeouts. They were taken private, they were LBOd or they were merged with another company.
Second takeaway was some of them adapted. So the New York Times is a good example where it’s actually trading, you know, higher than it ever has been, kind of across that history. Why? It’s doing podcasts now, it has subscribers for games, and it’s digitized. So they adopted.
That’s right.
The third takeaway that I thought was super interesting was even if you ultimately collapsed, so like a Barnes and Noble, you actually had a lot of local highs, meaning if you had stayed in it, it’s not like this happened all at once. And so even though Amazon like displaced something like Barnes and Noble, you had time.
So, so why do I bring that up? It’s to go back to this case study we have with software versus semis now where, you know, we, like, we’ve tracked them with IGV versus SMH.
Right.
And those have been very like divergent, right? Like one’s one’s fate is sort of the other’s fate too.
Right. Literally moving opposite.
Literally, like, and again, that causes the paddling duck market. However, there are these cases now where it’s like, actually, we we still like we still want you guys to figure it out with your AI because you’re still like the subject matter expert and also you’re going to take the liability if something goes wrong. Who knows, right?
But we’re starting to see that narrative shift a little. I actually think that continues similar to what we saw in our historical study.
That’s a really interesting…
Yeah, yeah, no, it’s it’s like I would have never thought of the newspaper example, but to your point, it shows like things do change and you have to stay kind of on top of that.
Yeah.
