Nvidia is up 165% in 2023. Here’s why it’s the big winner in the AI ​​race so far.

nvidia gaming laptops

Jensen Huang, CEO of Nvidia.Nvidia

  • Nvidia stock soared 165% in 2023 as investors realize the potential of artificial intelligence.

  • Nvidia appears to be best positioned for AI growth, as companies rely on its high-tech GPUs to power chatbots like ChatGPT and Bard.

  • Here’s why Nvidia is poised to continue dominating AI.

Nvidia woke investors up last week to the fact that artificial intelligence is going to be a really big deal — and a really big deal.

Nvidia shares soared as much as 30% on Thursday, adding nearly $200 billion to its market value after the company shared “stunning” revenue forecasts for its AI-powered GPU chips.

The stock is up 165% so far in 2023, and some analysts believe there is still plenty of room for growth. Wall Street analysts rushed to raise their price targets on Nvidia on Thursday, with some hitting as high as $500 a share. The stock was trading at $388.52 on Friday afternoon.

The company has grown from its founding 30 years ago focusing on video games, to selling “pickaxes and shovels” in the AI ​​gold rush.

Here’s why the Santa Clara, Calif.-based company is leading the pack in the AI ​​arms race.

“A true visionary”

“More than a decade ago, [CEO] Jensen Huang understood where the market was going, so [Nvidia] has invested billions of dollars not only in silicon, but also in software,” Ted Mortonson, technology strategist at Baird, told Insider on Friday. “And Jensen understood where the market was going before the market even materialized, so he’s a real visionary,”

Mortonson pointed to the success of Nvidia’s H-100 graphics processor, released last year.

According to Mortonson, the H-100 enabled “a quantum leap in training, inference, basically generative AI,” and it was this specific chip that allowed ChatGPT to make its big debut last November.

While Nvidia has the best chip to power AI capabilities, it also has the right software and silicon stack to maintain a competitive moat around its business.

“They’ve got the whole AI silicon stack. And it’s basically three components. They’ve got the most advanced GPU, they’ve got advanced networking built into the silicon, advanced memory built-in, and now they’re developing a new CPU,” said Mortonson explained.

In other words, Nvidia is a one-stop-shop for what companies need to drive their AI ambitions. They control their entire ecosystem, both on the hardware and software side, like Apple with its iPhone and iOS system, Mortonson said.

“When you tinker all of these things together, it’s an extremely powerful integrated AI engine. And they’re years ahead of anyone else,” Mortonson said, highlighting software development. of CUDA by Nvidia, which is well ahead of its nearest competitors.

Morton was adamant that the company’s success was the result of Huang’s foresight, comparing him to other tech icons like Tesla CEO Elon Musk.

“Their expertise in GPUs through their vision has taken them to the level of enabling AI across industries. So it’s really thanks to Jensen’s leadership, and I think he will go down as one of the great technologists of our time, with with Elon,” Mortonson said.

“Nvidia is clearly going to be the big winner”

Angelo Zino, financial analyst at CFRA, told Insider that Nvidia’s deep experience in GPU expertise and its current control of the GPU data center market means it will continue to lead the pack in the computing space. the AI.

“Nvidia is clearly going to be the biggest winner in our opinion. They are the inventor of GPUs, invented in 1999. They have over 95% market share of the GPU market in the data center space,” Zino said.

While CPUs, developed primarily by Intel and to some extent AMD, are unable to handle the large processing power needed to run AI, Nvidia’s GPUs can.

“Over the years, people realized that these GPUs had the ability to solve some of the toughest kinds of computing problems…and Huang had a vision of what that would eventually happen,” Zino said. .

He added that demand for GPUs will be a huge market for Nvidia, and not just for its core gaming and data center business, but for autonomous vehicles and a host of other technologies.

“The way they work with these companies is invaluable and a big reason why we believe they are likely to maintain above 90% market share for the foreseeable future,” Zino concluded.

Read the original article on Business Insider

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