Opportunities in DC, AI, Gaming, and Auto Drive Nvidia's Share Growth: Analysts

Nvidia Corp NVDA shares are trading higher after Morgan Stanley raised its price target on the stock from $450 to $500. Analyst Joseph Moore moved Nvidia to Top Pick over Advanced Micro Devices, Inc AMD.

Oppenheimer analyst Rick Schafer reiterated an Outperform rating on the stock. The analyst visited NVDA CFO Colette Kress at its headquarter Wednesday as part of his 21st annual semiconductor bus tour. 

The tone was confident as management conveyed optimism on the Data Center (DC) inflection point led by accelerated computing and generative AI. 

With the end of Moore’s law, management sees a $1 trillion DC installed base transitioning from general-purpose computing to accelerated computing to realize ~10x performance gains. Management sees nearly all workloads eventually being accelerated. 

ChatGPT triggered a race among cloud service providers (CSPs), the internet, and enterprises to incorporate generative AI across products and businesses. 

The management procured substantial incremental second-half supply to meet growing A100 and H100 demand. 

The analyst said units and ASPs would play a significant role in second-half growth. Industry peers Intel Corp INTC and AMD acknowledged NVDA’s undisputed dominance in training. 

The premise is still largely CPU but shifting to accelerators better tailored to those workloads. He believes a land grab is underway as CSPs turn attention to inference for performance and Total Cost Ownership (TCO) gains. 

Hyperscalers continue to drive exponential parameter growth for LLM. Management sees a growing number of smaller refined models across enterprises in diverse areas like healthcare, biotech, and physics. 

Capex spending from CSPs and others remains unchanged YTD, though the proportion dedicated to AI and accelerated computing continues to grow.

Management sees DGX Cloud as a partnership with CSPs presenting two potential revenue streams. DC, AI, high-performance gaming, and auto are the keys to NVDA’s entrance to the $1 trillion club.

Price Action: NVDA shares traded higher by 1.52% at $433.11 on the last check Friday.

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