Nvidia, despite recent management turmoil at OpenAI and increasing chip export restrictions by the U.S. government, has managed to keep up its success in the AI space.
Progress in Alleviating Supply Constraints
The upcoming earnings report from Nvidia is eagerly awaited as investors wonder how the company is progressing in addressing supply constraints to meet the rising demand. Analysts’ consensus estimate for Nvidia’s October quarter revenue is $16.2 billion, with adjusted earnings per share of $3.37. Furthermore, analysts predict that the current quarter’s revenue will reach $18.0 billion.
Strong Demand and Supply Challenges
Nvidia shares experienced a 2.3% increase on Monday, reaching $504.20. Piper Sandler analyst Harsh Kumar maintains an Overweight rating for Nvidia stock and has set a price target of $620 for its shares. Kumar believes that the demand from U.S. cloud and other data center clients remains robust, particularly as these firms continue to enhance their data centers with accelerated compute capabilities. However, the primary concern for Nvidia lies in the supply of GPUs.
Nvidia’s Dominance in the AI Chip Market
Nvidia holds a significant market share in AI chip usage, positioning itself as the primary beneficiary of this growing trend. Its GPUs are ideal for the parallel computations required to train AI models and cater to customer needs.
The H200 Tensor Core GPU and Increased Pace
Nvidia launched the H100, its current high-end AI chip, earlier this year, which quickly gained popularity in the technology industry as excitement over generative artificial intelligence surged. Looking ahead, Nvidia has announced its plans to release the H200 Tensor Core GPU in the second quarter of 2024, potentially sparking another wave of demand.
Moreover, Nvidia has accelerated its chip release schedule. The company’s investor presentation in October revealed that it is transitioning from a two-year product cycle to a one-year cadence for AI chips. According to a slide in the presentation, Nvidia aims to introduce additional high-end AI products in 2024 and 2025.
In conclusion, Nvidia continues to thrive in the AI space despite the challenges it faces in terms of supply constraints. Investors eagerly await the company’s upcoming earnings report for further clarity on its progress and performance.
