Chip stocks will get stronger as the year progresses, says top tech investor Dan Niles

• The AI market is transitioning from training and inference to 'agentic AI', leading to a massive increase in compute demand.
• Token production growth has surged from 20% to over 130%, indicating strong underlying demand for AI-related chips.
• Nvidia is expected to end the year higher, showing resilience even with competitors like Broadcom securing significant deals.
• CapEx cuts for companies like Meta (especially in non-core projects like Reality Labs) could be viewed positively, while cuts for cloud providers (AWS, Google, Azure) might signal broader issues due to high valuation multiples.

Dan Niles of Niles Investment Management believes chip stocks will strengthen throughout the year, driven by the shift to 'agentic AI' and increased compute demand. He notes Nvidia's resilience despite competitive deals and suggests a more selective market for AI winners, with differentiated impacts of CapEx plans for various tech giants.