When it comes to investing, one of the most prominent phrases used is the acronym FAANG, which is a simple way to refer to five of the largest U.S. companies: Facebook, Apple, Amazon, Netflix, and Google. While this acronym has been popular since 2013, Bank of America turned heads last week when they announced a new acronym that they have their eye on: MANGO. Analyst Vivek Arya coined the term MANGO as a way of grouping together companies that he believes will lead the way moving forward: Marvell Technology, Advanced Micro Devices, NVIDIA, GlobalFoundries, and onsemi. However, what makes Arya’s acronym unique is that it focuses entirely on a specific industry: semiconductors. Today, we’d like to dive into the sector to understand their impact on today and the future.
Semiconductors, better known as “chips”, are a vital component of electronics that allows electricity to conduct between conductors and insulators. While this may sound “jargony” or boring, the different types of chips and their various functions are already impacting your everyday life. For example, analog chips are used in “real world” devices that focus on a basic function, ranging from medical devices to thermostats. Digital chips, on the other hand, focus on the ability to compute. While digital chips have already become commonplace in computers and smartphones, analysts such as Arya believe that digital chips may still be in their infancy.
Regarding digital chips, there are two main types of chips: CPUs and GPUs. CPUs (Central Processing Units) are best known as the “brain” of a computer, as it processes all of the commands required to allow programs to run. The benefit of CPUs is their ability to process multiple types of programs quickly and effectively. GPUs (Graphics Processing Units), as the name suggests, specializes in tasks that require rendering 3D images and graphics; when you think about how much the quality of images has improved in videos and gaming, GPUs are responsible. However, while GPUs got their start in gaming, they may be integral to other parts of the future economy.
For a vehicle to be autonomous, there are two key components to its success: the ability to visualize the world around it, and the ability to make split-second decisions based on this available information. NVIDIA’s DRIVE, a computer platform specifically designed for autonomous vehicles, is meant to use both CPUs and GPUs to teach vehicles how to react in various situations by balancing a CPU’s ability to multitask with the GPU’s ability to project these potential scenarios. How soon after a car can be taught how to drive itself will other machinery be able to demonstrate full artificial intelligence? Only time will tell, but fully functioning A.I. may be here sooner that we think.
While semiconductors are already used in everyday devices such as gaming consoles and smartphones, it is the continued development of chips specialized for artificial intelligence that has analysts like Vivek Arya intrigued. While it is too early to know whether Arya’s MANGO acronym will stick, it does show that Wall Street continues to demonstrate an interest in the semiconductor industry and its impact on the future of our world.
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