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Why Nvidia's GTC could be a negative for Marvell and other optical stocks

Why Nvidia's GTC could be a negative for Marvell and other optical stocks

  • 17.03.2025 16:21
  • baystreet.ca
  • Keywords: Negative Impact, Market Volatility

Nvidia's GTC event may negatively impact optical and networking stocks like Marvell due to potential new CPO technology announcements. While some companies like Fabrinet could benefit, others like Lumentum and Coherent face risks as Nvidia's updates overshadow their performance.

Nvidia ProductsNVDAsentiment_dissatisfiedMRVLsentiment_dissatisfiedANETsentiment_dissatisfiedANETsentiment_dissatisfied

Estimated market influence

Nvidia

Nvidia

Negativesentiment_dissatisfied
Analyst rating: Strong buy

Expected to launch new CPO technology which could negatively impact optical and networking stocks.

Marvell

Marvell

Negativesentiment_dissatisfied
Analyst rating: Strong buy

Anticipated negative implications from Nvidia's potential CPO announcement.

Lumentum

Negativesentiment_dissatisfied
Analyst rating: N/A

Potential downward pressure due to competition from Nvidia's new technology.

Coherent Inc

Negativesentiment_dissatisfied
Analyst rating: N/A

Likely to face negative impact as per analyst expectations.

Arista Networks

Arista Networks

Negativesentiment_dissatisfied
Analyst rating: Buy

At risk of share loss due to Nvidia's new product updates.

Fabrinet

Positivesentiment_satisfied
Analyst rating: N/A

Seen as a winner in contract manufacturing deals with Nvidia for optical products.

Lumentum

Negativesentiment_dissatisfied
Analyst rating: N/A

Potential downward pressure due to competition from Nvidia's new technology.

Coherent Inc

Negativesentiment_dissatisfied
Analyst rating: N/A

Likely to face negative impact as per analyst expectations.

Arista Networks

Arista Networks

Negativesentiment_dissatisfied
Analyst rating: Buy

At risk of share loss due to Nvidia's new product updates.

Fabrinet

Positivesentiment_satisfied
Analyst rating: N/A

Seen as a winner in contract manufacturing deals with Nvidia for optical products.

Context

Analysis of NVIDIA's GTC Event and Market Implications

Key Facts and Data Points:

  • Event Date: March 18, 2024
  • Expected Announcements:
    • Co-packaged optics (CPO) technology in NVIDIA's switches (e.g., Infiniband and Spectrum X).
    • New ethernet and Infiniband-based switch technology.
  • Market Impact:
    • Potential negative impact on optical and networking stocks, including Marvell (MRVL), Lumentum (LITE), Coherent Inc (COHR), Arista Networks (ANET), and others.
    • Fabrinet (FN) could benefit as a contract manufacturing partner for NVIDIA's new optical products.

Market Trends and Business Impact:

  • Optical and Networking Stocks:
    • Marvell is at significant risk due to potential competition from NVIDIA's CPO technology.
    • Lumentum and Coherent may face downward pressure on their transceiver products.
    • Arista Networks could lose hyperscale cloud market share.
  • Co-Packaged Optics (CPO):
    • Expected to address bandwidth limitations in AI clusters, positioning NVIDIA as a leader in interconnect solutions.

Competitive Dynamics:

  • Winners:
    • Fabrinet (FN) is seen as a potential beneficiary due to manufacturing deals with NVIDIA.
  • Losers:
    • Marvell (MRVL), Lumentum (LITE), and Coherent Inc (COHR) are at risk of losing market share or facing reduced demand.

Strategic Considerations:

  • Analyst Sentiment:
    • Mizuho TMT specialist Jordan Klein expects lower volatility in NVIDIA (NVDA) stock but higher volatility in affected optical and networking stocks.
    • KeyBanc analyst John Vinh highlights the potential for NVIDIA's CPO to disrupt traditional optical solutions.
  • Investor Sentiment:
    • Low positioning and sentiment across impacted stocks, with CRDO being relatively more liked and owned.

Long-Term Effects and Regulatory Impacts:

  • Potential Future Developments:
    • NVIDIA's focus on AI and interconnect technologies may shift market dynamics in the optical networking sector.
    • The impact of CPO technology could reshape competition in hyperscale cloud infrastructure.

Conclusion:

NVIDIA's GTC event is expected to have significant implications for the optical and networking industries, with Marvell and other related stocks potentially facing headwinds. Meanwhile, Fabrinet may emerge as a beneficiary. Investors should monitor developments closely, particularly around NVIDIA's July earnings and product launches.