Nvidia is set to open 30% Higher on A.I. Euphoria, what happens next?
Michael Spencer
A.I. Writer, researcher and curator - full-time Newsletter publication manager.
A.I. Euphoria Lifts Nvidia's Market Cap Valuation Higher
THE GENERATIVE A.I. BRIEF
?? Nvidia is a symbol of the A.I. bull market rally of 2023. Well the first half, at least. The Enterprise A.I. Boom is here.
Hey Everyone,
Today’s post is going to be a brief macro look at Nvidia. Click on the title or?go here ?to read on your web browser. Nvidia, has more up its sleeve regarding A.I. than a corporate octopus. So, here’s the thing.
I’m an avid stock market watcher, I believe anyone with a serious interest in the future needs to understand the baseline reality of innovation at it works on the financial markets. Here we come to?NVDA?0.98%↑ ?Nvidia, already?up 113% year to date?(YTD) with a valuation nearing $1 Trillion.
Nvidia Corporation was founded in 1993 by Jensen Huang, Chris Malachowsky, and Curtis Priem. This means it is now a mature 30-year old business. It has a history of being great at anticipating future trends.
?? Nvidia is the 6th Biggest Company by Market Cap
After a great Earnings report, Nvidia’s stock at the time of writing is up?nearly 25%?after hours / pre-market. This means it could go up in the area of?$200 to $400 billion dollars?on May 25th, 2023 alone.
Nvidia now ?brands itself as an A.I. leader. and?their CEO is rightfully skeptical ?of Biden’s Chip ban on China. That the leaders of Nvidia and AMD, and not just TSMC are Taiwanese Americans is really fascinating here.
Nvidia CEO Jensen Huang is saying this week that Nvidia was seeing “surging demand” for its data center products. This even as Jensen Huang said curbs introduced by the Biden administration, which include restricting the export to China of advanced chips made with US technology, had left the business with “our hands tied behind our back”. Nvidia is caught in the middle of the geopolitical tension and A.I. arms race with China.
China’s?recent ban of Micron ?is exasperating the situation. The recent G7 meeting in Japan took aim at against?China’s “economic coercion” . Meanwhile China is luring more of the Global South countries like Brazil and many others to their side. All the while?lucrative Chinese loans ?are dangerous for developing countries. Most of whom will never be able to pay them back.
?? Nvidia’s Fiscal Quarter
If you think OpenAI are the major beneficiaries of A.I. hype, you don’t understand the importance of A.I. chips, datacenters and the real players in who powers the future of Generative A.I. Nvidia’s business trajectory is getting a significant push.
Nvidia’s monster Earnings ?will propel them to an even more iconic position as the world's most valuable chipmaker and Wall Street's fifth-most valuable company! Clearly, Nvidia must be doing something right.
China's cyberspace regulator on Sunday May 21st, 2023 announced that America's biggest memory chips "posed significant security risks to China’s critical information infrastructure supply chain, affecting China's national security". Biden’s bans on A.I. Chips in China will force them to build their own.
In an?interview with the Financial Times , Huang said: “If [China] can’t buy from … the United States, they’ll just build it themselves. So the US has to be careful. China is a very important market for the technology industry.”
Few companies are impacted by the Cold-tech war as much as TSMC and Nvidia. The CHIPS and Science Act pledges $52.7 Billion that roughly 300 companies will fight for. Clearly you don’t understand the future of A.I., if you don’t understand the semiconductor supply chain reality:
Nvidia: A Trillion Dollar Global Data Center Infrastructure
A trillion dollars of installed global data center infrastructure will transition from general purpose to accelerated computing as companies race to apply generative AI into every product, service and business process.
“Our entire data center family of products — H100, Grace CPU, Grace Hopper Superchip, NVLink, Quantum 400 InfiniBand and BlueField-3 DPU — is in production.?We are significantly increasing our supply to meet surging demand for them,” - Jensen Huang
Image source:?Trung .
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?? The Generative A.I. Enterprise Boom fuels Nvidia’s Growth in the Next Decade
Nvidia has incredible exposure to data-centers, A.I. and gaming. According to Statista, Nvidia’s revenue from the sale of its GPUs amounted to $11.9 billion in 2023. Nvidia’s primary source of revenue comes from the sale of GPUs, which generate the company about 87% of its revenue.
I don’t hold any of the stock, but euphoria is hitting the markets in a substantial way across companies directly with exposure to Generative A.I. and LLMs. The P/E ratio is nearing 200 as the stock market will open on May 25th, 2023. It’s actually a historic moment for the history of A.I.
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That gain puts Nvidia on track also to rack up the biggest one-day valuation jump in US company history.
Nvidia has found ingenius workarounds to the A.I. chip ban . Nvidia, the biggest maker of the advanced chips required to train a new generation of AI services, inflamed already lofty expectations for a burgeoning technology.
?? Blowing Wall Street Estimates out of the Water
Nvidia said it expected sales of about $11 billion, plus or minus 2%, in the current quarter, more than 50% higher than Wall Street estimates of $7.15 billion.
This is an unusual but expected beat. Powering a lot of the Generative A.I. LLM innovation is of course a roughly $10,000 chip that’s become one of the most critical tools in the artificial intelligence industry:?The Nvidia A100.
Blow-out Guidance
Nvidia “provided blow-out guidance, powerfully underscoring the bull thesis that this company sits at the heart of one of tech’s seminal transition points,” said?Adam Crisafulli , founder of newsletter Vital Knowledge. (Bloomberg)
The centralization of market cap in the NASDAQ and S&P is now at titanic proportions. In short, the bull market recovery in the stock market is being fueled by A.I. speculation, euphoria and how many times a company can say “AI” in their earnings Call.?Mentions of artificial intelligence?in earnings calls are up 75% so far this year, even as the number of companies referencing the technology has barely budged, MarketWatch analysis finds.
The Markets are moved by sentiment, and A.I. hype is just another form of sentiment & shareholder indulgence. Meta (Facebook) understood this, who have their?META?1.10%↑ ?stock up 100% in the first half of 2023 alone as well.?Mark Zuckerberg referenced AI?about 27 times at Meta's earnings call back in the end of April, 2023.
Even in a PC and gaming slowdown, Nvidia’s Data-center play is so strong. Consider how its business is tethered to the Cloud itself. Nvidia supplies the hardware that runs most of the major cloud providers, including Amazon, Alibaba, and Microsoft.
??? ♀? The Great Surge
I call the A.I. euphoria of 2023, the “great surge”. If?ChatGPT was a black swan ?moment, and if GPT, that is Generative Pre-trained Transformer technology are really General Purpose Technologies, we haven’t seen anything yet!
Prior to the after-hours move, Nvidia stock was up 109% so far in 2023, mostly driven by optimism stemming from the company’s leading position in the market for artificial intelligence chips. Nvidia CEO Jensen Huang said the company was seeing “surging demand” for its data center products.
Nvidia makes good headlines because it’s agnostic to how A.I. will evolve. But the A.I. Enterprise Boom truly is a spectacle to behold, everyone from AI software maker?C3.ai ?and Palantir Technologies are launching their own A.I. platforms.?Meta ?and?Amazon ?also have to take their turns in the spotlight eventually.
ITF World 2023 Keynote with NVIDIA CEO Jensen Huang
Generative A.I. is fueling an Enterprise A.I. Renaissance
I’m watching closely how the Biden Chip ban might impact China’s capability to keeping up in LLMs.
Nvidia said last August that US officials had told it to stop exporting two artificial intelligence chips to China, although the company later announced the development of a product that would meet US government restrictions. Nvidia’s chips are widely seen as a key tool in the development of the large language models that underpin chatbots such as ChatGPT.
In late?March, 2023 it looked like Nvidia ?had a workaround for China. ChatGPT and the euphoria with LLMs after a long while in a deep learning winter, has ushered in new optimism about the future of A.I., and a?lot of speculation about AGI too .
Nvidia is also a huge beneficiary not just of Generative A.I. but the nascent autonomous vehicles sector. They makes money in the automotive industry is by providing its advanced AI and GPU technologies for autonomous vehicles. For investors, this point is often overlooked. Nvidia, not Tesla, is a major beneficiary or someone like Intel’s Mobileye?MBLY?0.97%↑ ?.
The Enterprise A.I. boom has a narrative that LLMs will improve worker productivity. In coding and for software engineers or in advertising, I can imagine how that works. Where China?has a youth unemployment crisis ?on its hands in 2023, it really does make me wonder. If Generative A.I. at the Enterprise level make employees more productive, won’t that decrease demand and lead to job disruptions?
Since things like Data Centers, Generative A.I., Gaming and AVs have such a good future trajectory, so does Nvidia itself.
Nvidia’s brightest moment?even comes as Gaming is tanking. First-quarter revenue was $2.24 billion, down 38% from a year ago and up 22% from the previous quarter for Nvidia in gaming.
Nvidia’s Customer Segments are Diversified
?? Approaching “Singularity Euphoria”??
Nvidia has a peak of trading at 68 times expected earnings in 2021, according to Refinitiv data. We may break that record today or soon in 2023 if things keep pointing to singularity euphoria.
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1 年Michael, Great information on the hardware boom in a.i... just subscribed!
A.I. Writer, researcher and curator - full-time Newsletter publication manager.
1 年Sign up for my new Newsletter here: https://the-generative-a-i-brief.ck.page/