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And a name that's certainly come up on our radar are is AMD stock was down about three percent at its lose today now down about one point three percent. Bloomberg reporting that US officials have told the company that the artificial intelligence chip that had tailored for the Chinese market too powerful to sell without a license, so ensnaring another American semiconductor company again, perhaps in Washington's crackdown on exports of advanced technologies.
Tim Hey.
For more, we turned to John Vinn, Managing director an equity research analyst at key Bank Capital Markets. John joining us from San Francisco where he's at the key Bank Capital Markets Emerging Tech Summit. John, before we get to the specifics of AMD, which is certainly one of the companies you cover, I do want to get your your thoughts on this market, Salaf, especially on the tech side. How are you interpreting the weakness that we're seeing today.
Yeah, I think there's a number of different factors that are coming into play. Obviously, the geopolitical tensions with the China restrictions on AMD and I three hundred decks. Obviously, AI has been one of the kind of leading drivers of the sema conductor industry. You also have another, you know, reports out that iPhone sales are down over twenty percent in the China market, and obviously that's been a big
driver of some actuctors spend out there as well. So there's just a lot of headlines out there that are just kind of impacting the semic conductor market at this point.
Is there any of it though? Okay, so semiconductor, but I mean in overall the tech trade here, do you think the markets considering the run up that we've seen. Certainly, if you look at the Nasdaq one hundred this year, it makes sense to see somewhat of a pullback here or a little bit of a kind of maybe revaluation in terms of the run up that we've had.
Sure, sure, absolutely, you know, I think what we're just seeing here is just a little bit of pullback just given how strong the overall tech markets have been, and obviously, you know, some of the conductors have been a big part of that. So it does make sense that just given the headlines and some of the concerns that we're seeing today. You know, it does make sense that we're seeing a little bit of a pullback.
Let's remind everybody the socks is up sixteen percent this year, so quite a run up.
So I mean, John, is it healthy to see a day like today or is it? Does it concern you?
I'm not overly concerned. You know, obviously it shouldn't be a surprise that, you know, iPhones are kind of not doing as well in the China market right now, and talking about it from US, yeah, it's it's been weak. And you know, obviously we know Huawei's kind of back into the market, and obviously they've been we've been seeing signs over the last several months that they've been gaining spare at the expensive Apple and you know, on the on the AMD front, you know, that shouldn't be a
surprise either. I'm not really overly concerned about it. If you think about am d's positioning there, they're coming from zero share in the a AI market and most of their share and revenue news that we expect this year are expected to be a really non Chinese driven. It's really going to be driven by all the major hyperscalers that are more North American base and less we see them less dependent upon the China market, at least in this early part of the c I cycle for them.
Yeah, and if I look at the socks today, while it looks like every name, all of the thirty names and the Philadelphia Semiconductor Index are down today, John, and Nvidia is doing the best, just down about four tensive a percent. AMD is the third best, but it's still down about one point six percent, so definitely outperforming what we're seeing. More broadly, Let's go to Nvidia, right, best performing name in the S and P five hundred last year, best performing name in the S and P five hundred
again this year. What are your expectations realistically that this is that this one will continue to outperform and fundamentally it has the reasons why.
Yeah, we absolutely still believe that in video's well positioned to you all perform in the semi market right now. You know, obviously they are the clear major beneficiary of the investment we're seeing in generative AI. You know, we're here at the Emerging Tech Stomach conference, and you know, one of the trends that's very clear here is that AI is being embedded into literally every application and end
devices out there. Right It all started in the data center with the training of these large language models, and over time, obviously that's going to move to inferencing. But you're seeing significant investment in software, and then you're also seeing significant investments in kind of pushing AI to the edge.
I think that the next product cycle that we can probably look forward to over the next several years is potentially you know, edge AI, which includes you know, potentially the the proliferation of AI PCs as well as you know AI smartphones.
Hey, John, you got an eleven hundred dollars price target on in videos, so significant ups side from here where it's trading at eight forty seven right now. One question that I've been grappling with over the last few months is really understanding the benefits of AI to a general company. We understand the beneficiaries as you know, super microcomputer, in Vidia a m D, but give me an idea about how the mom and pop company that can go out and buy one of these in Vidia chips will benefit
from using AI. How will it get you know, people to buy more stuff, How will it get ads to be more efficient? How will it get fewer people to do to do more?
Yeah, I think a lot of those questions are still kind of very early days. Obviously, chat GBT and open Ai has given us a flavor of it. Some of the applications that we see obviously still very early days that are always to improve significant efficiencies of small medium sized businesses are going to be potentially copilot, right, Copilot is embedded into off that's just going to make it more efficient for your average user to prepare presentations, right,
to make a more efficient sales pitch. And then also again you know I talked about these EDGAI devices and endpoints such as AI smartphones. You know, I think one application that we potentially see and have heard about it in Qualcom, one of my other covered companies has talked about is like real time translation.
Right.
So today you can use Google Translate, but there's a there's a latency issue, right, so if you enter entered a phrase has to go to the cloud and then it comes back. But if you have a small, smaller size, large language model that it's embedded to your smartphones that is capable of supporting real time translation, right, I mean that's those are some applications that we look for that that could make things a lot more efficient.
Yeah, that would be really useful. Hey, John, promise that we can check in with you after the conference and either come on by our studio or we'll cap remotely, because love to talk more about what you're hearing and making the connection between kind of all the stuff that's out there, especially in the AI space, in the semiconductor space, and how we kind of ultimately put it all to work. So thanks, thanks so much for taking time for us.
Of course, John vid he's a managing director equity research analyst over at key Bank Capital Markets, joining us from San Francisco where he's at the key Bank Capital Market's Emerging Tech Summit.
We got Andrew Collins with us. He's president and CEO of a Sentient Jet, also the COCO of the parent company, flex Jet. Good to have you back with us. Andrew, How are you good?
Much? So?
Did you see any of that weakness in twenty twenty three that Dasso referred to in their earnings report?
You know, it's funny because we deal with a lot of OEMs at the Flexjet level and we have a fleet of about three hundred aircraft.
There original equipment manufacturers.
Original equipment manufacturers. Sorry, I know Embraer, Golfstream people like that, right. So at the end of the day, actually they had back orders and we had delays in getting aircraft and things like that. So I don't want to call to sew kind of an anomaly, But at the end of the day, we could fill that capacity and we could take those aircraft on, and we continue to take aircraft on.
But what about demand. Was demand in twenty twenty three higher or lower?
It depends on what you're looking at in the facet of the industry. So if you look at it from a fractional ownership standpoint, there was a lot of selling that happened and a lot of pent up hours that happened. So we just had the most flying we've ever had
in company history over President Day weekend. Right. If you look at it from a jet card standpoint, which is Sentient Jet, we did see it kind of start to soften, and in the on demand market it's really getting back to kind of a it's still growth over twenty nineteen, and you're still seeing some of the people retain from the pandemic, but it isn't like twenty one and twenty two where I think everybody was running.
Around with their hair on dig into that demand over President's Day holiday? Were there deals like I don't know how, you know it was industry, So what was it all about?
No, it's it's you know, I'll tell you what. In twenty one and twenty two, it was long hours, long days, and every day felt like what we call a peak day. It just felt like everybody wanted to fly persistently. It used to be that like a Monday or a Tuesday or you know, you get a break. There was not a lot of breaks. Now what's happening is you're having high concentration days. And so in the fractional world, when somebody buys for a five year time horizon into an aircraft,
they've bought the hours they're going to use that. So the owner demand for that spikes on certain days. And so collectively we've got the most hours under management we've ever had at a company and it unlocked on President's stable.
How much is an inventory those hours? Like I'm always curious, like do you guys look at that of like, Okay, this is stuff that people have paid for, have to spend and use.
Yeah, no, we it's actually one of the major KPIs in our business. It's called hours under management, and you have to look at it by product, by aircraft, and you have to think about it. And that's how you do your demand, your demand shaping, how you think about capacity planning and everything else.
How much visibility does it give you right now?
It gives me very good visibility, Like the forward looks really good, twelve months, still good, twenty four months. Depends on how our year goes. From a selling standpoint.
Pilots having trouble getting pilots.
No, I think the challenge for us. So we probably hired four hundred pilots at the flexjet level in twenty three. We'll do the same this year. I think what you have to think about is number one, we actually try to hire the best of the best pilots. We don't look for just any pilot, right.
So where they coming from? Are they coming from regional carriers? Are they retiring from.
No, they could be coming from a competitor, They could be coming from a regional carrier, They could be coming out of the military. Okay, But what we found is you want to make sure that if you're hiring somebody you're hiring on a track where they're going to stay through three years. They stay through three years, they're in for a career. We want it to be a career destination.
We do find that. Excuse me, we're actually competing more with commercial airlines than we are any other competitor because the commercial airlines are really putting out large sums of money and large caps, and they're unionized, and they're unionized. But what people forget is the history of commercial right where there's furloughs and things happen, you know, and so so it looks very rosy right now. I think we've got a pretty methodical plan and a pretty good destination
for you as a career type. So yeah, we've we've put a lot of money into recruiting our pilots.
It was an ideal pilot in terms of age and hours that they've already got.
So you want somebody that's got the time and type. You want somebody that's experienced. You want somebody that has at least a minimum of three thousand hours. You know, he really has. Like we actually increased it recently as opposed to decrease it. Most people are decreasing it.
That's why I wanted to ask you.
And that's actually a good bell weather for us. That just shows you the strength of who we are. We're trying not to fall into the trap of, you know, recruit at all costs. We're trying to get the best of the best.
Can you remind us on pricing, give us an idea of like if somebody wants to take a trip and have you up in the last tie, so like my mother.
So I let me speak to it at the card level, because that's that's where I had a lot of experience. At the end of the day during the surge, when everybody wanted it, we the market would bear any thing, right, Yeah, And for us, we had to keep up with the market and keep pace and make sure we were living up to the consumer promise. So we had to augment pricing. Okay, so we augmented pricing probably by thirty five percent. It's the biggest jump I've ever seen and we've kept it
there and the market is bearing it. It's it's our cell through is probably about ten to fifteen percent less than what we were doing. But we're very happy with the clients we bring in.
Got it.
Hey, I want to talk sustainability a little bit, because sustainable is not something you think of when you think about private air track And I'm going.
To tell you we're going to get a million of emails of people like you're talking private jets sustainability.
Come on, you're burning dead dynas.
Come on. I'm happy to do it. It's my favorite topic.
Are you following Elon's jet? Are Tailor's jet?
Yeah?
I know all about it seriously, So how.
Do you think about it? I mean, you guys hit a milestone recently, but it's carbon offsets, right.
No, it's more than carbon offsets. You want to do full emissions. So this is the big mistake that people make in our industry, and we're trying to actually lead the pack. So we do three hundred percent offsetting and it's built into the pricing. It is no cost to the consumer. This is a choice we made three and a half years ago, and even during the time when we had to pay operators lots of money during the surge and really think about things, we never wavered on this.
This is really important to us. You do a full emissions offset, it's not just doing carbon you know, a carbon offset, you're getting water vapors, aerosols, you know, every imprint that you possibly can, you're factoring that in. And we work with a partner who's gone through and certified a lot of different projects to help us with this, plus registering our offsets and everything else. So it's really
important to us. We've probably offset about one point three one point four million metric tons of carbon dioxide at this point, and we're gonna keep going and we've got millions earmarked for it. We need to get to a world of sustainable aviation fuel and we need to get this electric kind of world to happen, and it's gonna happen further out than we hoped ten seconds.
How quickly can we get there?
Seven years? Seven years? Yeah, it used to be five. Everybody would say five. I think mass consumer, mass passenger. You'll see some hybrids, but I think it's about five to seven years minimum.
Great stuff is always come back soon, absolutely anytime. Andrew Collins, president and CEO of Sentient Jet and co CEO of the parent company, Flexjet, joining us here in studio