Nvidia Corp. sees itself in a unique position to capitalize on an artificial intelligence revolution, analysts say, as the chipmaker’s stock posted its best gaining streak since 2007 on Wednesday.
At Nvidia
NVDA
At the annual GTC developer conference, the gaming chip specialist launched a range of hardware and software products geared to be the pickaxes and shovels of the current AI gold rush and entered into a new partnership with Alphabet Inc. a
GOOD
Google
Google Cloud Platform.
Nvidia stock closed up 1% for the eighth consecutive day on Wednesday, with a gain of 15.3% during that period, making it the longest winning streak for Nvidia stock since July 2020 and the stock’s best eight-day winning streak since Eight days of power ended June 22, 2007, during which it was up 17.4%, according to Dow Jones Market Data.
Wall Street analysts reported Wednesday that Nvidia’s graphics processing units are being widely adopted by cloud service providers as the company’s software offerings create a wider moat. Bernstein analyst Stacy Rasgon, with an outperform rating on the stock, said Nvidia is in a unique place to capitalize on the death or slowdown of Moore’s Law “as they deliver both the hardware and software environment necessary for the operation of the data center requires cost and energy efficiency, which are becoming increasingly unattainable with CPUs.”
Read: Nvidia launches new AI platforms, with Google Cloud as an early adopter
Rasgon added that Nvidia’s advantage in its software ecosystem “always seems to become almost insurmountable”.
“To be honest, even if they could manage to come close on the hardware side, we find it hard to imagine how anyone else could compete with Nvidia’s ecosystem,” Rasgon said.
On Tuesday, Nvidia Founder and Chief Executive Jensen Huang announced a range of products and services aimed at expanding AI development, including new chips and platforms specifically aimed at generative AI applications and AI video and image creation are. On Wednesday, Huang said in a news conference that he expects the tiny revenue the company is currently generating from generative AI to become “quite big” over the next 12 months.
For more: How Nvidia intends to drive the rise of AI and a new era in chip manufacturing
Citi Research analyst Atif Malik, who has a buy rating and raised his price target to $310, echoed what Huang said this week, calling the Google partnership “a big deal.” He noted that Google chose Nvidia’s L4 inference chips over its own custom TPU5 silicon, “which opens up greater computing power [total addressable market] for Nvidia.”
Malik also noted that “companies are reaching out as some are looking for Gen AI solutions and expertise on large language models” and that the company “is in negotiations” “on margins.” [cloud-service providers] Upselling on top of existing infrastructure and/or full-stack offerings.”
Vivek Arya, an analyst at B of A Securities who has a buy rating on the stock, said Nvidia platforms will be in increasing demand as AI becomes more ubiquitous in everyone’s daily lives.
“Nvidia’s dominance of the emerging Generative AI/Large Language Model (LLM) market… could reshape the existing tech industry and usher in disruptive startups,” said Arya.
Nvidia’s “combination of scale and vision to invest in a full-stack (hardware, software, systems, services, developers) turnkey model could accelerate enterprise adoption of LLMs in almost every end market,” said Arya. “This view is supported by the largest hyperscalers/technology companies incl. Microsoft (Azure), Amazon
AMZN
(AWS), Google (GCP), Oracle
ORCL
(OCI) and others who see a partnership with Nvidia as a more effective way to launch LLM-based applications.”
Read: Nvidia CEO expects AI revenue to grow from “tiny, tiny, tiny” to “pretty big” over the next 12 months
Google on Tuesday launched a new AI product, Bard, one of the many new generative AI products looking to monetize after OpenAI’s ChatGPT — backed by a multibillion-dollar investment from Microsoft Corp.
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– attracted a lot of attention. Also Adobe Inc.
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,
announced at its own event on Tuesday an AI product called Firefly, a “co-pilot” technology aimed at helping with content creation within its own products, which Nvidia also highlighted.
Nvidia shares are up 2.9% on the week and 81% year-to-date, while the S&P 500 index
SPX
is up 0.5% for the week and 2.5% for the year, and the tech-heavy Nasdaq Composite Index
COMP
increased by 0.3% and 11.5% respectively.
Of the 46 analysts covering Nvidia, 32 have a buy rating, 13 have a hold rating and one has a sell rating, along with an average price target of $261.69, according to data from FactSet.
