Despite falling interest rates, tech stocks diverge... Nvidia faces overvaluation debate, but some say 'strong buy'

Despite the recent trend of falling interest rates, Big Tech and semiconductor companies' stock prices are showing conflicting movements. Typically, falling interest rates positively impact Big Tech companies, leading to stock price increases, but this phenomenon is not currently observed.

This divergence is analyzed as stemming from a gap between Big Tech companies that generate profits and semiconductor companies that rely on receiving funds. The market is applying different standards to the two sectors despite falling interest rates.

The US 10-year Treasury yield has fallen slightly from 4.7% to 4.6%. This decline is primarily attributed to long-term debt buybacks, and the market expects this downward trend to continue until November.

However, critics point out that these buybacks have limitations in fundamentally resolving the national fiscal deficit problem. Some also argue that interest rate declines due to short-term measures cannot guarantee long-term market stability.

The effect of long-term debt buybacks may be limited, and fiscal health issues remain unresolved, increasing market uncertainty.

Contrary to market expectations for interest rate cuts, pessimistic forecasts are also emerging. Analysis suggests that conditions are not ripe for rate cuts, as the self-employed business climate is deteriorating, oil prices are stagnant, and inflation continues to rise.

Furthermore, concerns are being raised that the deepening government fiscal deficit is leading to a continuous increase in bond issuance, which could hinder interest rate declines. The prevailing view is that short-term debt buybacks alone are insufficient to continuously lower interest rates.

An investment alert has been issued for cloud leasing companies like CoreWeave. These companies are highly susceptible to financial risk, as their interest expense burden could significantly increase if interest rates rise.

Interest rate hikes can be fatal for companies, especially those operating at a loss, and cloud leasing companies with massive borrowings could be even more severely impacted. This could lead to a deterioration in corporate profitability.

Moreover, increased competition within the cloud market and pressure to lower prices could further erode the profitability of these companies.

It was mentioned that Lee Hang-young, a committee member of MiJuMi Live, is currently not participating in the broadcast. Lee Hang-young has not retired but is taking a temporary break due to a significant family matter.

As of August 22nd, it has been confirmed that Lee Hang-young is doing well and is expected to return to broadcasting in the future. Thanks were extended for viewers' concern and interest, with anticipation expressed for his return soon.

Therefore, Lee Hang-young's absence is temporary, and a positive outlook for his return has been provided.

Concerns are growing over the passage of the government budget bill, as debt issues have suddenly come to the forefront. These debt problems could delay the passage of the national budget, potentially disrupting government operations.

Furthermore, there are predictions that this could lead to a government shutdown. A government shutdown can cause severe social and economic chaos, such as the suspension of civil servant salaries, thereby heightening market tensions.

Nvidia's stock price has been declining for the past 7-8 days. One of the main reasons for this decline is the market's negative reaction to Nvidia's announcement of a 15% product price increase.

The market believes that an additional price hike could be burdensome, given that tech companies are already incurring significant costs. Consequently, Nvidia's price increase policy is interpreted as having negatively impacted its stock price in the short term.

It has been pointed out that Samsung Electronics' shareholder return policy is limited by the Financial Industry Structure Improvement Act (Geumsan Act). The Geumsan Act prohibits non-financial companies from holding more than 10% of a financial company's shares. Due to this regulation, the shareholding ratio of Samsung Electronics held by Samsung Life Insurance and Samsung Fire & Marine Insurance could become an issue.

If Samsung Electronics cancels its treasury shares, the shareholding ratio of Samsung Electronics held by Samsung Life Insurance and Samsung Fire & Marine Insurance would relatively increase, risking a violation of the Geumsan Act. This situation makes it difficult for Samsung Electronics to implement aggressive shareholder return policies such as special dividends or large-scale treasury share cancellations.

Some have suggested that if the shareholding ratio increases, the problem could be solved through additional sales. Still, overall disappointment is evident that the Geumsan Act acts as a significant constraint on Samsung Electronics' shareholder return policy.

Market expectations for Nvidia and all other semiconductor and AI-related stocks are excessively high. Despite Nvidia's projected sales of $92 billion and EPS of $2.2, the market is no longer highly impressed by guidance around $103 billion.

This is because investors already take Nvidia's excellent performance for granted. Investors have the mindset of 'everyone knows it's good, but they want more,' and expectations are already so high that ordinary earnings announcements are unlikely to drive stock price increases.

Nvidia's stock price is now demanded to meet expectations beyond mere performance, known as the 'Whisper Number.' While the operating profit forecast for 2025 is 45 trillion won, the market has set high expectations, requiring 65 trillion won this year and 72 trillion won next year.

Investors perceive current performance as ordinary and expect 'even better results.' Even a massive operating profit of 72 trillion won is now considered a target that must be achieved.

These heightened investor expectations are causing significant volatility in Nvidia's stock price. If it fails to meet guidance or show results exceeding market expectations, it could be exposed to a sharp stock price decline.

The recent decline in tech stocks is largely attributed to institutional investors realizing profits and hedge funds reducing their tech stock holdings. Hedge funds heavily sold tech and semiconductor stocks that comprise the Nasdaq 100 index in the second quarter.

This is interpreted as a move to lock in profits, based on the perception that tech stocks have reached their peak. The judgment of market participants, 'we gained a lot, so we sold,' is cited as one of the main reasons for the stock price decline.

Three main tasks have been presented for Nvidia's stock price recovery. The first is to prove its dominant market position through cost reduction. This is an essential factor for Nvidia to maintain its competitive advantage and secure profitability.

The second is to resolve data center bottlenecks and activate infrastructure financing effects. Nvidia needs to support startups with $500 billion in financial financing to expand its ecosystem and create demand.

The third is the relaxation of H200 export regulations to China. The Chinese market remains a crucial revenue source for Nvidia, and regulatory easing could positively impact performance improvement.

Some investment experts have expressed the view that Nvidia is currently undervalued and it is time for a strong buy. They expect the next year's P/R to fall to 14x and 10x by 2028, considering the current stock price of up to $350 to be too cheap.

They believe Nvidia is evolving from a mere manufacturer into a company building an AI ecosystem. This is why they highly value Nvidia's long-term growth potential.

Furthermore, with institutional investors' holdings having decreased, they analyzed that the stock is likely to react more lightly and see a significant rise in future price increases. This suggests that if institutional buying begins, the stock price increase could be substantial.

Jim Cramer advised closely watching the bond market. He emphasized that the bond market could be the most threatening factor when interest rate declines are difficult.

The surge in corporate bond issuance to build AI data centers is acting as a factor preventing interest rate declines. Such large-scale fundraising can lead to upward pressure on market interest rates.

Therefore, as interest rate cuts are not easy, investors should carefully monitor interest rate trends and formulate their investment strategies.

The 'Miracle' broadcast, which was previously pre-recorded, will be transitioned to a YouTube Live format in the future. This decision aims to enhance real-time communication with viewers and deliver the vividness of the live event.

The shift to live broadcasting is expected to enable more active interaction, as viewers will be able to ask questions and receive answers in real-time during the broadcast.

Several key economic indicators that could create market tension are awaiting release. In particular, the Personal Consumption Expenditures (PCE) price index, to be announced tomorrow, will be an important clue for gauging the direction of the Federal Reserve's monetary policy.

With Nvidia's earnings announcement and the revised GDP release also scheduled, market attention is focused. As multiple important indicators are released simultaneously, the market awaits the results with high tension.

Broadcom's credit default swap (CDS) figures, an indicator of bankruptcy risk, have risen. This indicates an increased risk of corporate default, a trend observed in most companies with rising CDS figures.

Concerns are being raised that if purchase commitments or unrealized lease liabilities are reflected in the financial statements, Broadcom's financial health could be negatively impacted. These potential liabilities could act as factors increasing corporate risk.

It was pointed out that unlike in the past, it is difficult to find US stock experts from institutional brokerage firms today. This suggests a change in the US stock investment market and altered criteria for experts' qualifications and professionalism.

While there used to be many from institutional backgrounds, now individuals who have built expertise through personal investing or other channels are predominantly active. This change also affects the accessibility and dissemination of US stock information.

It was pointed out that there is a misconception among US stock investors that if a stock is cheap, it will rise significantly. However, US stocks tend to be valued highly when their price returns to its original level after a stock split.

This emphasizes that merely because a stock price is low does not mean it has significant upside potential. It is crucial to understand a company's fundamental value and growth potential, and making investment decisions based solely on stock price levels can be risky.

Currently, the tech stock market, excluding Nvidia, is showing a sluggish trend without any particular direction. While Nvidia rebounded due to expectations of its earnings announcement, other tech stocks lack upward momentum.

AMD saw an increase due to an issue with its target price being raised, but other tech stocks have been unable to escape a downward trend. This suggests that concentrated expectations and investment sentiment for Nvidia are not spreading to other tech stocks.

Consequently, there is no significant rebound or clear upward momentum across the tech sector, and the prevailing assessment is that only 'meaningless rebounds' are occurring intermittently.

A warning was issued that during interest rate hikes, it can be very difficult for tech companies operating at a loss to defend their stock prices. Quantum computing-related stocks like IONQ, which have shown poor performance recently, are an example.

If interest rates continue to rise, loss-making companies with high interest expense burdens may see their stock prices continue to fall due to deteriorating financial health. Therefore, investors should carefully consider investments in such companies.

Regarding future broadcast plans, the intention to consider establishing a Sunday live broadcast called 'No. 1 Live' was expressed. This live broadcast will focus on the most important news and key insights from the past week.

This is interpreted as an intention to further strengthen communication with viewers and provide in-depth analysis of weekly market trends. The plan to start the live broadcast once preparations are complete was indicated with the condition 'if the skills are sufficient'.