Risk of US tech giants becoming next Nokia or BlackBerry being overlooked, says top investor
The risk of major technology companies collapsing in value is not properly appreciated despite the relatively recent examples of Nokia and BlackBerry, says top investor Gervais Williams.
Mr Williams, who is Head of Equities for Premier Miton Investors and author of books including The Retreat of Globalisation and The Future Is Small, is predicting the UK stock market will become the best performer in the world over the next 20 years.
He told The Yorkshire Post that one factor in his assessment is his belief that currently strongly-performing US technology stocks are more vulnerable than is currently recognised.
He highlighted the recent past examples of Nokia and Blackberry, phone companies which were both once stock market darlings but whose sizes have shrunk drastically as rival technology overtook them.
Nokia was capitalised at $246bn (£187bn) in 2000 but is now little over $21bn while BlackBerry fell from $66bn in June 2008 to $1.39bn today.
Today’s big tech companies such as Apple, chip firm Nvidia and Tesla all have far bigger market capitalisations than Nokia and BlackBerry did at their peak, with Apple and Nvidia both valued at over $3,000bn.
Mr Williams said: “In 2000 Nokia was the mobile phone company of the time and then everyone stopped using Nokia phones and started using BlackBerries and then eventually Apples. Nokia has gone down 90 per cent – it was pretty much the biggest company in the world at one stage.
"Obsolescence risk is really just very poorly priced.
"I don’t know whether we will stop using Apple phones or Nvidia products, I can’t say. But what I can say is that if we do, my goodness there is a lot of money to be lost.”
On Wednesday, Nvidia will update shareholders and analysts over its trading performance for its second quarter to the end of July.
The chip firm, which is currently the world’s second largest listed company behind Microsoft, has seen its share price surge more than 160 per cent since the start of the year as investors banked on continued growth for its AI and data centre businesses.
In the first quarter, Nvidia revenues shot up 262 per cent to $26bn, rising beyond the industry forecasts laid out in its previous update.
Nvidia’s growth was supported by the rapid growth of its data centre business, which includes the development of its H100 graphics cards which are widely used to power generative AI apps, such as ChatGPT.
An analyst consensus compiled by Zacks Investment Research forecast that overall group revenues are likely to be 109 per cent higher for the second quarter as AI-related growth continued to support the business.
Aarin Chiekrie, equity analyst at Hargreaves Lansdown, said: “Analysts are expecting this momentum to continue into this week’s results.
“The likes of Meta, Amazon, and Microsoft are all customers, each with deep pockets and a desire to build out their AI offerings with the power of Nvidia’s market-leading chips.
“That’s underpinning the market’s view that second-quarter revenue and operating profits can more than double to $28.6bn and $18.7bn respectively.”
The analyst said he believes these projections look “achievable”, with investors therefore likely to have a particularly keen eye on its outlook for the rest of the year.