Investing.com -- NVIDIA's (NASDAQ:NVDA) highly anticipated GTC event kicks off on Tuesday, March 18. While everyone will be waiting with bated breath on what CEO Jensen Huang will say about the AI outlook, the event could be a downer for certain optical and networking stocks, including Marvell (NASDAQ:MRVL).
Analysts expect Huang to provide commentary on co-packaged optics (CPO). “All the talk across buyside is on expectation that NVDA will officially launch new ethernet and Infiniband based switch technology that includes co-packaged optics (CPO),” Mizuho TMT specialist Jordan Klein commented Monday. “Buyside view seems to be that GTC could have a bigger impact on optical and networking stocks vs NVDA itself.”
KeyBanc analyst John Vinh describes the new CPO as “new interconnects that will allow NVDA to overcome bandwidth limits as cluster sizes continue to grow.” They expect this technology to appear in NVDA switches first, such as the NVDA Infiniband and Spectrum X products.
Vinh said that the potential CPO news has negative implications for Marvell, although he thinks the news has been widely anticipated and may be pried in.
Beyond Marvell, Klein thinks the event could create downward pressure on optical transceivers from Lumentum (NASDAQ:LITE) and Coherent Inc (NYSE:COHR). On the ethernet networking on cloud hyperscale side Arista Networks (NYSE:ANET) will be at greater risk of share loss.
Meanwhile, Klein said buysiders he talks with see Fabrinet (NYSE:FN) as a winner in terms of contract manufacturing deals with Nvidia for their new optical based switches and or transceiver products. He added that many also think Lumentum could be mentioned as the laser source supplier to Nvidia and Coherent would be a loser.
“I sort of expect less than expected vol and moves in NVDA this week and higher vol in names like LITE, ANET, MRVL, COHR, MTSI, ALAB, CRDO and SMTC (NASDAQ:SMTX),” Klein said. Positioning and sentiment super low in all these stocks, albeit CRDO seems to be by far the most liked and owned, especially after the massive drop post their strong beat and raise earnings.”
“Personally, I still like NVDA but see stock as range bound until maybe the may earnings results,” Klein added. “Catalyst needs to be a stronger July qtr guide and more clarity on timing of gm rebound and gb300 volume ramp. MRVL and AMD (NASDAQ:AMD) seem like most at risk near term from new NVDA product updates, albeit feel like cons shorts (especially MRVL). LITE and CRDO are my favorite optical and high speed connectivity longs right now, but I still think ALAB, CORH and MTSI can start to act better into mid yr. I am more positive FN right now as it still feels like buyside all short as a hedge against CRDO, LITE, etc.”
