Text size
Telsa CEO Elon Musk has a lot of respect for Nvidia CEO Jensen Huang.
Joel Saget/AFP via Getty Images
Investors excited about
Nvidia
,
artificial intelligence, and AI’s ability to drive earnings and stock growth got a nice tidbit from an unexpected source Wednesday evening:
Tesla
CEO Elon Musk.
“We’re using a lot of Nvidia (ticker: NVDA) hardware…we’ll actually take Nvidia hardware as fast as Nvidia will deliver it to us,” said Musk on his company’s second-quarter conference call. “Tremendous respect for [CEO} Jensen [Huang] and Nvidia. They have done an incredible job. And frankly, I don’t know, if they could deliver us enough GPUs, we might not need Dojo. But they can’t. They have got so many customers.”
GPU is short for graphics-processing units, a type of computing technology.
Tesla (TSLA) needs Nvidia hardware, and the associated software, to improve its self-driving software. Tesla’s Dojo computing platform, along with Nvidia hardware, teaches cars to drive themselves.
“We just see a demand for really advanced training resources,” added Musk. “We think we may reach in-house neural net training capability of 100 exoflops by the end of next year.”
An exaflop is a measure of computing power that equals 1,000,000,000,000,000,000 (that’s a 1 with 18 zeros behind it) floating-point operations executed each second. It is the kind of computing power that enables computers to drive or write essays for high school students.
Musk’s comments are bullish for Nvidia, but Nvidia stock isn’t moving. Shares are down about 1.2% in early trading Thursday. The
S&P 500
and
Nasdaq Composite
are off 0.1% and up 0.5%, respectively.
Musk’s comments are nice, but everyone knows things are good for Nvidia. Coming into Thursday trading, Nvidia stock is up more than 50% since late May when the company reported a blowout first quarter driven by surging demand for AI computing.
Interestingly, Tesla stock is also up more than 50% since Nvidia’s quarterly report. There are other reasons for Tesla’s rise including record deliveries and new deals with auto makers opening up Tesla’s supercharging network to non-Tesla EVs. But Tesla has also become an AI stock. Dojo, self-driving, and AI dominated questions during the second-quarter earnings call.
As for Nvidia, it reports fiscal-second-quarter earnings in late August. Susquehanna analyst Christopher Rolland wrote Thursday that he expects another beat “as the scramble for [hardware], networking, and AI systems intensifies.”
He is looking for Nvidia to report earnings per share of $2.10. Wall Street is currently modeling $2.07. Rolland also sees fiscal 2025 earnings per share of as much as $15. Wall Street models $11.20 a share. He rates Nvidia stock at Buy with a $575 price target.
Fiscal 2025 is almost calendar 2024 for Nvidia, as the fiscal year ends in January.
At earnings per share of $15, Nvidia stock would be trading at about 31 times calendar 2024 earnings. Tesla stock trades at about 59 times estimated 2024 earnings. For comparison,
Intel
stock (INTC) trades at 20 times calendar 2024 earnings, while General Motors (GM) stock trades at six times. The S&P 500 index trades at about 18 times estimated 2024 earnings
Write to Al Root at [email protected]
Source: https://www.barrons.com/articles/tesla-elon-musk-nvidia-ai-chips-fb9c2e82?siteid=yhoof2&yptr=yahoo