Finimize - ⚔️ Nvidia vs. Huawei

What’s going on here?

Europe’s stock markets showed the US that you can break records and still get a solid eight hours of sleep at night.

What does this mean?

Europe has a reputation for taking life slow, swapping overtime for siestas and energy drinks for cortados. Well, it seems a well-rested region is a force to be reckoned with: European stocks have trudged through months of heady inflation – which kicked economies in the shins and made it tough for folk to put focaccia on the table – and come out the other side in fine form. The DAX index, which tracks the 40 biggest German stocks, notched a new record high on Tuesday. That’s a big deal: Germany is usually Europe’s go-getter, so the country finding its balance again bodes well for the region as a whole. French stocks started closing in on their highest points too, while Italian indexes did their best since before the 2008 financial crisis. La dolce vita, indeed.

Why should I care?

Zooming out: Europe could make the red, white, and blue green with envy.

Take those fired-up stocks out of the equation, and Europe still has plenty to brag about. The region’s governments have been more conservative with their spending lately, building up a smaller debt pile than their stateside equivalent. Plus, inflation’s falling faster in Europe than the US, paving the way for central banks to cut their economy-squashing interest rates and encourage savers to start spending instead.

The bigger picture: Never doubt an underdog.

The US is the epitome of a work hard, play hard culture – and in many of the nation’s tech companies, you can forget about the play hard bit. That work paid off, though: Big Tech has done the US stock market a hell of a favor this year. So it’s even more impressive, then, that Europe’s markets have wrangled such success without the big-name artificial intelligence picks that have carried the US of A.

What’s going on here?

Nvidia admitted that Chinese tech heavyweight Huawei is proving to be a real worthy opponent.

What does this mean?

Nvidia is to chipmakers what Hoover is to vacuum cleaners. But Huawei is one of the many competitors racing to produce the smartest, fastest AI chips. In other words, trying to pull a Dyson. Nvidia is well aware of that: the US firm has classed Chinese-based Huawei as a formidable opponent – not least because it believes US chipmakers are at least a decade away from creating supply chains that don’t rely on China, leaving them more vulnerable to international tensions. After all, China has historically made up a fifth of Nvidia’s sales, and the country's $7 billion market could switch loyalties for a local chipmaker in a second.

Why should I care?

For markets: China’s supporting local businesses.

The US has been keeping a tight lid on its smartest chips, concerned that unlimited exports to China would result in a high-tech, unbeatable military force. But Nvidia might be in trouble either way. The company’s already warned that its Chinese sales will tank in the coming months – and there’s no guarantee that they’ll bounce back after the ban. Huawei recently surprised the US with a Chinese-made smartphone processor that could rival two-year-old chips from US manufacturer Qualcomm. And if China can shop local, there’s no reason to send business to the states.

The bigger picture: Smart trucks, you’re next.

Huawei’s already giving Nvidia a run for its money – literally. And it’s not just the chip market that the US needs to keep an eye on: the Chinese tech superstar has a toe in the electric vehicle industry and plans to invest into souped-up car systems. Even stock market stalwart Apple has lost out to Chinese innovation, with Xiaomi’s more affordable smartphones stealing attention away from the latest iPhone 15 launch.