Reports that NVIDIA (NASDAQ: NVDA) could make its Blackwell chips are resonating throughout the semiconductor industry. The news is good for numerous reasons, but there are hurdles and risks to be overcome. The good news is that a path to expanded Blackwell production and reduced geopolitical risk is clear. The bad news is that Taiwan Semiconductor (NYSE: TSM) isn’t 100% capable of manufacturing the chips in the United States, at least not yet.
NVIDIA Onshoring and Ramping Production of Blackwell
Onshoring the production of NVIDIA chips aligns with national interests and reduces geopolitical exposure to China, but this isn’t possible with this deal. TSMC’s Arizona facility is state-of-the-art but not equipped to produce CoWoS or Chip-on-Wafer-on-Substrate packaging, a proprietary process developed for high-intensity computing and AI needs. That means Blackwell chips will have to be shipped to Taiwan for completion, bringing geopolitical risk and many others back into the equation, but there is hope.
TSMC was awarded $6.6 billion in CHIPS Act funding as part of a total investment plan of $65 billion. The money will be used to build new facilities, which may include a new CoWoS facility critical to onshoring Blackwell production. The company is already considering new plants in Japan and the US to meet the increased demand and plans to double its production capacity more than once by 2026.
There is hope that a deal with Amkor (NASDAQ: AMKR) will meet NVIDIA’s needs between then and now. Amkor is a global supplier of microchip packaging services and will do CoWoS at Arizona facilities. TSMC and Amkor inked a deal earlier this year, and the first production facility plans are set. Early TSMC customers likely to benefit include Advanced Micro Devices (NASDAQ: AMD), NVIDIA’s most significant competition in AI GPU and CPUs, and Apple (NASDAQ: AAPL). The bad news is that the first phase won’t be completed until 2027 or later, and the final stages are slated to open in the middle of the next decade.
NVIDIA Will Suprise the Market With Rubin in 2025
There is growing speculation that NVIDIA will surprise the market and release the next generation of AI technology six months earlier than anticipated. The news is strengthening the updraft in share prices and will likely result in persistent data center upgrades over the long term. Rubin is expected to generate better outcomes because of AI-specific architecture, TSMC’s advanced 3nm manufacturing process, and next-generation HBM4 memory. The chips are expected to be more powerful, store exponentially more data, and work more efficiently than their predecessors. NVIDIA has also partnered with Schneider Electric to develop innovative cooling systems for its advanced GPU and CPU products.
MarketBeat hasn’t tracked analyst activity related to the TSMC/Arizona news, but the group is active in 2024, and the trends are positive. The analysts’ coverage is rising; the sentiment is firm at a Strong Buy, and the consensus price target is increasing. The price target rose nearly 15% in November alone, and the revisions led to even higher price points. Consensus assumes about 15% upside from the critical support target while the high-end adds another 25%.
The price action is bullish in late 2024, with the stock at fresh all-time highs and showing support at a critical level. The critical level aligns with a previous all-time high and the top of a consolidation range. The next big move will likely be higher, with the critical resistance target near $150. A move above that level would likely trigger another momentum upswing and take the market up to the $190 to $200 range.
Okta’s (NASDAQ: OKTA) share price has suffered since the peaks set in 2021, but those days are over. The cyber security company has gained traction over the past two years, and the Okta stock market normalized after its bubble burst. Today’s takeaway is that the CQ3/FQ2 2025 results sparked a high-volume movement, signaling support at a critical level, confirming the market bottom, and a high likelihood it will continue to move higher and confirm a complete reversal. The daily and weekly charts show some resistance to higher prices, but the overall signal is very bullish. It shows support at a pair of moving averages, a golden crossover in the EMAs, convergence and bearish crossovers in the technical indicators, and near-record volume.
Okta: Beat and Raise Quarter Impresses the Analysts
Okta had a solid quarter, with large customers and public and private businesses contributing to growth. The company reported $665 million in net revenue, up 14% year over year, driven by a 14% increase in subscriptions. The revenue outpaced MarketBeat’s reported consensus by 230 basis points and is compounded by wider margins, leveraged bottom-line results, and robust guidance. RPO, an indicator of future growth, grew by 19%, with nearly 14% expected to be recognized in the next 12 months.
The margin news is more impressive, with gross and operating margins improving compared to last year. The company continues to post GAAP losses, but the loss narrowed significantly, putting the company on track for GAAP profits soon. The adjusted operating margin, which is important because of cash flow, was widened by 600 basis points to drive robust cash and free cash flow, about 23% of the revenue.
The report’s most impressive detail is the guidance. The company guided for strength in Q4 and the year relative to the consensus, putting the low end of the revenue and EPS range well above the analysts’ forecast. The Q4 EPS is expected to be more than 500 basis points above the pre-release consensus, but the company may be cautious with its estimates. Security is a priority for businesses, institutions, and organizations globally and is only becoming more so as the pace and severity of attacks increase.
The Analysts Heap Praise on Okta After Solid Guidance
The analysts are overwhelmingly bullish in their response to the news, showering it with price target increases and at least one upgrade. The 20 updates tracked by MarketBeat include a few reiterated price targets but a sufficient number of increases to lift the consensus by nearly 500 basis points overnight. The revision trend shows a high conviction in the belief that this stock will trade above $100, which is good for a minimum gain of nearly 20% from critical support levels. The trend suggests the market will move into the high-end range within twelve months, adding another 35% to 40% to the stock price. The takeaway from the chatter is that Okta’s improved execution drives results in the face of economic headwinds, new products are expected to drive growth in the long term, and the growth trajectory is good.
The institutional activity also supports Okta’s stock price in CQ4. The institutions own more than 85% of the stock and have bought on balance every quarter of 2024. Their activity aligns with the market bottom and support at the 150-day moving average. The stock price above that average indicates it can trend higher in 2025. The critical resistance level is near the $100 mark and may be tested soon. A move above $100 is another bullish signal that could trigger an inflow of fresh capital. In that scenario, the market could quickly move up to the analysts’ high-end range.
BlackRock (NYSE: BLK) is the world’s largest asset manager, and the company recently announced an intriguing and significant strategic shift. BlackRock has released that it will acquire HPS Investment Partners for approximately $12 billion, marking a bold expansion into the rapidly growing private credit market and presenting a compelling investment opportunity for investors willing to stomach the risks of investing in the rapidly expanding private credit sector.
Private credit encompasses debt financing provided directly to companies by institutions outside the traditional banking system. Unlike publicly traded bonds, private credit investments are not subject to the same regulatory scrutiny and liquidity. This market has experienced remarkable growth driven by several factors. Tighter regulations on banks, coupled with increased demand for alternative financing solutions for companies, particularly smaller businesses, have created significant opportunities in this previously less accessible market segment. Key players now include not only traditional banks but also large asset managers, private equity firms, and specialized credit funds, creating a dynamic and often highly competitive investment terrain.
BlackRock: A Financial Colossus
BlackRock’s success in asset management is undeniable. With trillions in assets under management (AUM) and a vast global reach, it is synonymous with stability and financial strength. The firm’s history of innovation and consistent performance in managing diversified investment portfolios has solidified its position as an industry leader. BlackRock’s ability to manage significant sums of capital effectively underscores the firm’s capacity to take on large-scale acquisitions and integrate them successfully into its broader operations.
The HPS Acquisition: A Strategic Masterstroke
BlackRock’s acquisition of HPS Investment Partners, a highly specialized private credit firm with approximately $148 billion in AUM, is a pivotal moment in its ongoing evolution. The $12 billion all-stock deal underscores the considerable commitment BlackRock has made to expand into private credit. This transaction was not primarily for increased immediate profits but instead focused on developing a longer-term competitive advantage by directly accessing the expanding private credit market.
This acquisition allows BlackRock to seamlessly integrate its public market expertise with HPS’s specialized capabilities in private credit. The synergy between BlackRock’s comprehensive technological platform and HPS’s expertise in originating and underwriting complex private credit opportunities creates a strong value proposition for their combined client base. The creation of a new private financing solutions business unit, uniting the two firms’ strengths, positions BlackRock to offer more sophisticated and comprehensive financial products that cater to the increasingly complex demands of institutions and large corporations.
BlackRock’s Recent Acquisitions and Strategic Vision
The HPS acquisition is not an isolated incident. Earlier this year, BlackRock also acquired Global Infrastructure Partners (GIP) and the private market data provider Preqin. These transactions demonstrate a consistent and deliberate strategic expansion into alternative asset classes. BlackRock’s leadership has openly discussed their belief that a blending of public and private market strategies better serves the evolving needs of their institutional investors. By acquiring expertise in private credit, infrastructure, and data-driven analytics, BlackRock is strategically positioning itself to capture opportunities in these dynamic market segments and remain at the forefront of innovative financial services.
BlackRock’s earnings for the third quarter of fiscal year 2024 (Q3 FY2024) revealed a picture of financial health. The asset manager reported record quarterly net inflows of $221 billion, representing an 8% annualized organic asset growth rate. This substantial influx of capital underscores strong client confidence and demand for BlackRock’s diverse investment products and services. Moreover, revenue surged 15% year-over-year, exceeding BlackRock’s analyst community’s expectations.
Diluted earnings per share (EPS) reached $10.90, exceeding consensus estimates, further demonstrating BlackRock’s ability to generate strong financial performance. The company also declared a quarterly dividend of $5.10 per share, underlining its commitment to shareholder returns and reflecting a sustainable dividend payout policy. These impressive figures underscore BlackRock’s financial strength and its well-positioned status for continued growth, providing a solid base for its strategic expansion in the competitive private credit sector.
Navigating the Inherent Risks
While BlackRock’s strategic moves and financial health are promising, potential risks must be carefully considered. The private credit market is inherently less liquid than public markets. Integrating HPS’s operations into BlackRock’s existing infrastructure presents challenges. The complexity of underwriting private credit investments, combined with the evolving regulatory environment, could also impact BlackRock’s financial returns. Further, general market volatility remains a significant risk, impacting all publicly traded securities, including BlackRock’s stock. The competitive terrain in the asset management industry is also intense, with other major players aggressively pursuing similar strategic growth opportunities.
BlackRock in Private Credit
BlackRock’s foray into private credit presents a compelling yet complex investment opportunity. The potential for substantial long-term growth, driven by the expanding private credit market and BlackRock’s strategic acquisition of HPS Investment Partners, is significant.
However, the inherent illiquidity of private credit and the integration challenges associated with such a large-scale acquisition introduce notable risks to BlackRock’s portfolio. The complexity of private credit underwriting and evolving regulations introduce uncertainty. General market fluctuations will also affect BlackRock’s performance, underscoring the importance of a long-term perspective.
Therefore, investors considering BlackRock stock should carefully evaluate their risk tolerance. Conservative investors might find other, less volatile options more suitable. Moderate investors might view BlackRock as a compelling long-term growth opportunity, factoring in the potential rewards against the recognized risks. Aggressive investors, willing to accept higher volatility for potentially higher returns, may find BlackRock’s expansion into the dynamic private credit market especially appealing. Careful analysis of BlackRock’s ongoing performance and the integration of HPS will be critical in assessing the investment’s actual return. A diversified investment strategy remains advisable for mitigating overall risk exposure.
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