NVIDIA Corporation (NVDA) is gearing up for its first-quarter earnings report, a much-anticipated event considering the tech giant’s pivotal role in the AI sector. The soaring demand for NVIDIA’s AI infrastructure is reflected in the increased capital expenditures of its key clients, underscoring the company’s growing influence in AI advancements.
NVIDIA’s H100 GPU, a critical component in cutting-edge AI models like ChatGPT, is one of its standout products. With a price tag exceeding $40,000, the H100 GPU has become a critical investment for tech giants. Elon Musk recently announced during Tesla’s earnings call that the company plans to double its fleet of H100 GPUs by year’s end to bolster its Full Self-Driving technology. Tesla has already installed and operationalized around 35,000 H100s, with plans to scale up to 85,000 by December.
Other tech behemoths are following suit. Meta Platforms, in a bid to support its AI infrastructure, has significantly increased its capex forecast for 2024 and reportedly purchased around 850,000 H100 GPUs from NVIDIA, valued at approximately $30 billion. Microsoft and Alphabet are also making substantial investments, with Microsoft aiming to amass 1.8 million GPUs by the end of next year. Alphabet, meanwhile, saw its capex double in the first quarter, primarily driven by investments in its AI infrastructure.
Amazon has hinted at similar ambitions, projecting increased capital expenditures, particularly in support of its Amazon Web Services (AWS) division and its generative AI capabilities. This suggests a significant portion of the estimated $205 billion in capex from Microsoft, Alphabet, Meta, and Amazon will likely flow to NVIDIA.
Despite competition from other chipmakers, NVIDIA continues to capture a dominant market share in the AI sector. Advanced Micro Devices (AMD), for instance, forecasts revenue of $4 billion for its MI300 AI chip in 2024, significantly lower than NVIDIA’s anticipated revenue exceeding $100 billion for the same period. Similarly, Intel, with its Gaudi 3 AI chip, projects modest sales of $500 million this year.
Analysts are generally bullish on NVIDIA, predicting a potential upside of over 30%. However, opinions among investors and analysts remain divided, with some suggesting a pullback to $800 is possible.
NVIDIA’s ongoing developments, including enhancements to its ChatRTX chatbot and collaboration with suppliers like SK Hynix, reflect the company’s broader ambitions. The latter’s high-bandwidth memory chips, crucial for AI, are already sold out for the coming years, underscoring the robust demand for AI services.
In summary, NVIDIA’s upcoming earnings report is poised to provide critical insights into its future trajectory. The company’s robust positioning in the AI sector, backed by strong partnerships and innovative products, suggests continued growth, despite recent stock volatility. The stock’s recent consolidation reflects a market in anticipation, waiting for clarity from NVIDIA’s next move.