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Another volatile month for the market as tariffs and trade war threats persisted (and have clearly had a further significant impact on the market and tech so far in April). Tech stocks continued to fall further in March and we saw a significant pullback in Nvidia in particular, the largest holding in the portfolio. This contrasted with what we saw as an extremely strong showing at Nvidia's annual developer conference, GTC, which highlighted its technology leadership and software advantages.
March is a quieter month for corporate earnings, but the supply chain data points we've seen - including AI chip utilization, data center vacancy rates, and memory pricing - are still strong and suggest that demand continues to outpace supply.
OpenAI’s GPT images were perhaps the most viral launch since ChatGPT itself in November 2022, and demand was so high that the company limited the new model to paid users and even restricted their usage. OpenAI CEO Sal Altman went on to comment that the company was suffering from a GPU shortage. The long exposure continues to be focused on the companies we expect to be the long-term winners from this technological shift to accelerated computing.
Within our short exposure, we continued to see short opportunities in the broad industrial and automotive sectors, as well as smartphone component suppliers, which we believe will also be most exposed to increased tariffs. We also continue to see short opportunities in the IT services sector, given the federal budget headwinds and clearly we are in the crosshairs of any macroeconomic weakness.