The world’s most valuable chipmaker is worth more than ever. A day before Nvidia reports its highly anticipated third-quarter results today (November 21), the AI chip specialist’s stock hit an all-time high of $504.09.
Market optimism is justified. As tech companies large and small race to deploy generative artificial intelligence, Nvidia is reaping the rewards. THE nearly $800 billion companywhose AI chips are the most advanced, could be the biggest beneficiary of the wave of generative AI.
For the third quarter, Nvidia expects approximately $16 billion in revenuealmost triple its transport during the same period in 2022.
Earlier this year, the company was overwhelmed by demand, thanks to a shortage of graphics processing units (GPUs) and network equipment. In response, it was stimulate supply to consolidate its pole position as the world’s leading supplier of AI chips.
Quote: Generative AI is the biggest technological phenomenon
“Generative AI is the most important platform transition in the history of computing… In the last 40 years, nothing has been this important. It’s bigger than a PC, it’s bigger than mobile, and it’s going to be bigger than the Internet by far.
—Jensen Huang, CEO of Nvidia at Microsoft’s Ignite event last week
Chart: Nvidia stock hits record high
A non-exhaustive list of threats weighing on Nvidia stock
💪 Competition from Big Tech. Nvidia’s small rivals are struggling to attract investor interest, but deep-pocketed tech giants have thrown their hat into the ring. Traditional chip manufacturers such as Intel And AMD are increasing investments in next-generation AI chips. In April, search giant Google said its AI supercomputer was faster and greener than Nvidia’s A100 chip. Last week, Microsoft announced its own AI chip challenger to Nvidia, which could reduce its dependence on the company. Sam Altman, the recently ousted OpenAI CEO who was swept aside by Microsoft chief Satya Nadellawould have been fundraising in the Middle East for a new chip project called Tigris. “Is this happening now under Microsoft? asked the Nov. 20 CBInsights newsletter.
🌎 Geopolitical tensions. As Nvidia navigates US-China trade disputes with new chips tailored to the Chinese market, export restrictions have already stood in the way and could cause more disruption as tensions give way to tensions. On a smaller scale, The United States limits its exports to Middle Eastern countries would also harm its business.
👐 Double ordering and inflated sales projections. “Given the race for chip supply, double orders could occur,” Kyle Rodda, senior market analyst at global trading platform Capital.com, told Quartz. “However, it is unclear how widespread this phenomenon is. If the situation is endemic, the company’s future sales could be seriously compromised, especially if a significant slowdown or negative shock results in orders being withdrawn.”
The disproportionate growth of Nvidia, in figures
170%: How much Nvidia expects revenue to grow year-over-year in the quarter ended September 30
70%: Nvidia’s share of the AI chip market
20-25%: China’s share of Nvidia’s data center sales
1.5 to 2 million: Nvidia’s target for shipments of its highly sought-after H100 processor in 2024, compared to 500,000 this year
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