Monday, April 15, 2024

Wall Street Analysts are Buying Nvidia Stocks for these 3 Reasons

HomeStock-MarketWall Street Analysts are Buying Nvidia Stocks for these 3 Reasons

SAN JOSE, Calif. — The artificial intelligence arms race is fully underway, and one company is arming all the major players. At its annual GPU Technology Conference this week, chip maker Nvidia unveiled a slew of new AI hardware and software offerings that analysts say extend its leadership and make it a must-own stock.

“Nvidia is cementing itself as the preeminent AI computing company for the coming decades,” said Stacy Rasgon, semiconductor analyst at Bernstein Research. “Between their latest technologies and comprehensive enablement tools, they are putting immense distance between themselves and would-be competitors.”

Here are three key reasons Wall Street analysts are doubling down on Nvidia stock in the wake of this week’s announcements:

Blackwell GPUs Massively Advance AI Computing Power

The centerpiece of Nvidia’s platform updates is the new Blackwell chip architecture featuring the B200 Tensor Core GPU. Packing an incredible 208 billion transistors, this processor delivers a staggering 5 times more AI performance than the company’s previous generation H100 chip released just last year.

“The Blackwell B200 represents a monster leap in computational capabilities for training large language models and generative AI,” said semiconductor analyst Vivek Arya of Bank of America Securities. “It can scale up to 10 trillion parameters, whereas ChatGPT’s GPT-3 had only 175 billion.”

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Nvidia is also combining two B200 GPUs with a Grace CPU and ultra-fast NVLink interconnects into a unified “Grace Blackwell Supership” system. This behemoth will enable AI model training up to 30 times faster than prior Nvidia offerings while reducing energy consumption by up to 25%.

“The performance and efficiency gains are just mind-blowing,” said Arya. “Nvidia has well-extended their technical lead.”

Cloud Giants Embrace Nvidia’s Latest

AMD may have won the latest battle for AI cloud chips at Microsoft, but Nvidia appears to be conquering the broader war for next-gen AI infrastructure. All three major cloud providers — Amazon Web Services, Microsoft Azure, and Google Cloud — announced plans this week to offer Nvidia’s new Blackwell processors.

“It’s a clean sweep for Nvidia across hyperscale AI cloud adoption,” said Chris Caso, semiconductor analyst at Credit Suisse. “Every key player has raised their hand to make the Blackwell platform a core accelerator offering moving forward.”

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AWS CEO Adam Selipsky called the Nvidia Grace Blackwell chip a “significant step forward for generative AI.” Meanwhile, Microsoft revealed it will use the processors to power predictions for its new Copilot AI assistant.

“Hyperscale cloud is the modern computational battleground, and Nvidia has convinced everyone from Amazon to Google that their hardware is essential artillery,” said Caso.

Nvidia Aims to Democratize AI Development

While Nvidia’s latest silicon grabbed most headlines, the company also unveiled a major new software platform called Nvidia Inference Manager (NIM). This comprehensive stack aims to streamline and simplify AI model deployment and scaling for businesses of all sizes.

“NIM puts AI model development and optimization within reach for companies beyond just the tech giants with massive AI teams and budgets,” said Rasgon of Bernstein. “It establishes a new paradigm for AI workflow deployment and management.”

By providing pre-built, optimized AI models that can be customized with a company’s proprietary data, NIM promises to greatly accelerate AI adoption and reduce development costs across industries. Analysts view the platform as complementary to Nvidia’s hardware dominance, creating an attractive full-stack AI enablement offering.

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“Between chips like Blackwell, software like NIM, and their extensive AI ecosystem partnerships, Nvidia is assembling a comprehensive AI computing platform that will be hard for others to match,” said Rasgon. “It’s an incredible competitive advantage.”

Of course, putting advanced AI into more hands also raises risks and governance concerns that Nvidia and industry leaders will need to stay ahead of. But for now, Wall Street sees the AI growth runway as unobstructed — and Nvidia unequivocally in the pole position.

“Nvidia is beyond just a semiconductor company at this point,” said Caso of Credit Suisse. “With every major announcement, they are fortifying their position as the preeminent luminary propelling civilization into the AI era. For investors able to keep an open, growth-oriented mindset, Nvidia’s stock remains a compelling vehicle to participate.”

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Mezhar Alee
Mezhar Alee
Mezhar Alee is a prolific author who provides commentary and analysis on business, finance, politics, sports, and current events on his website Opportuneist. With over a decade of experience in journalism and blogging, Mezhar aims to deliver well-researched insights and thought-provoking perspectives on important local and global issues in society.

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