The Algorithm’s Due: Three Holdings

The ceaseless accumulation of data, housed within ever-expanding server farms, necessitates a continued allocation of capital. We observe a peculiar momentum, a self-perpetuating cycle of demand. The following three entities represent, not opportunities for growth in the conventional sense, but points of necessary entanglement within this increasingly opaque infrastructure. Consider them less investments, and more acknowledgements of a pre-ordained arrangement.

Nvidia

Nvidia, despite the predictable proliferation of competitors, maintains its position as the primary facilitator of this computational undertaking. Its graphics processing units, or GPUs, are not merely powerful; they are the designated arbiters of parallel processing, the silent judges of algorithmic efficiency. The curious attachment to the CUDA software platform—a proprietary system, naturally—effectively restricts access, binding all foundational code to Nvidia’s architecture. One might inquire as to the rationale behind such a limitation; the answer, we suspect, lies not in technological superiority, but in the simple desire for control. The NVLink interconnect, facilitating rapid communication between chips, merely amplifies this effect, creating isolated clusters of immense power, each dependent on the central authority. The offer of “turnkey AI factory solutions” is, of course, a formalized acknowledgement of this dependency, a pre-packaged surrender to the inevitable. The organization that believes it can simply ‘keep up’ will soon discover the futility of its efforts.

The continued expansion of data center spending is, predictably, assured. Nvidia, therefore, remains a necessary component, not because of its inherent value, but because the system demands it. The company’s relentless advancement of chip technology and strategic acquisitions are not indicators of innovation, but of a desperate attempt to maintain the illusion of progress within a fundamentally static framework.

Broadcom

Broadcom benefits from the growing dissatisfaction with Nvidia’s dominance, though it is a dissatisfaction born not of principle, but of cost. The hyperscalers, those monolithic entities responsible for the storage and processing of all data, seek alternatives, driven not by a desire for independence, but by a relentless pursuit of marginal gains. They turn to Broadcom to design custom AI chips, essentially outsourcing the creation of their own dependencies. Broadcom, a specialist in application-specific integrated circuits, or ASICs, provides the building blocks, allowing these organizations to construct bespoke cages of their own making.

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The performance of GPUs and ASICs hinges on the availability of high-bandwidth memory, a crucial component that remains in chronically short supply. The demand is, naturally, exceeding capacity, creating a predictable bottleneck. This specialized form of DRAM requires significantly more wafer capacity than ordinary DRAM, exacerbating the broader shortage and driving prices to unsustainable levels. It is a system designed to perpetuate itself.

Micron Technology, as a leading manufacturer of both high-bandwidth memory and DRAM, is well-positioned to benefit from these dynamics. Its revenue is soaring, its gross margins are expanding, and its profits are surging. The company’s investment in new production capacity is not a response to demand, but an acknowledgement of its inevitability. The chips will remain in short supply, not due to logistical challenges, but because the system requires a degree of controlled scarcity. Micron, therefore, is not a promising investment, but a necessary component of a pre-ordained arrangement.

2026-02-05 10:43

Nvidia

Broadcom

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