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Jefferies expects Nvidia to report higher data-center revenue than either Intel or Advanced Micro Devices next week.
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Nvidia is strengthening its leadership position on the major cloud-computing platforms for artificial intelligence projects, Jefferies says.
Analyst Mark Lipacis analyzed the June numbers from six top cloud-based service providers. He found
Nvidia
‘s (ticker: NVDA) market share for AI workloads rose by 3.5 percentage points over the past year to 85%.
At the public cloud-computing vendors, “Nvidia dominates dedicated [AI] accelerator instances,” he wrote. “Nvidia made up nearly all of the incremental overall accelerator deployments since February 2022.” Accelerators are a term for AI-related semiconductors.
Nvidia shares were down 1.1% to $430.06 on Thursday, in line with the loss in the
Nasdaq Composite.
After looking at the latest data, the analyst reiterated his Buy rating for Nvidia stock. He expects Nvidia’s second-quarter data center revenue will surpass those from Intel and Advanced Micro Devices for the first time in history when the chip maker reports next week.
Nvidia’s high market share for AI chips puts the company in a solid position to benefit from generative AI software that ingests text, images, and videos to create content. OpenAI’s release of ChatGPT late last year sparked interest in this form of AI.
The cloud service providers Jefferies tracked are Alibaba Aliyun, Amazon Web Services, Microsoft Azure, Google Cloud Platform, Oracle Cloud, and Tencent Cloud. The vendors sell data-center computing power to their customers.
Experts have said start-ups and corporations use Nvidia’s chips for AI applications because of its robust software programming platform ecosystem, known as CUDA. Developers have been building and sharing AI-related tools and software libraries for over a decade on Nvidia’s proprietary platform, making it easier to build AI applications rapidly.
Last month, senior executives at Microsoft and Alphabet, Google’s parent, said they plan to invest aggressively in AI infrastructure over the next year, bolstering Lipacis’s confidence about Nvidia’s future revenue.
Write to Tae Kim at [email protected]
Source: https://www.barrons.com/articles/nvidia-ai-chips-stock-buy-9755a69f?siteid=yhoof2&yptr=yahoo