Nvidia Looks Like The Primary Beneficiary Of A Shift In The Computing Business Model

NVIDIA Corporation NVDA's beat-and-raise quarter isn't the most impressive aspect of the company's first-quarter earnings report, at least according to analysts at Jefferies.

Anlayst Mark Lipacis maintained a Buy rating on Nvidia's stock with an unchanged $140 price target as the company is showing signs of being "the primary beneficiary" of an ongoing shift in the computer business model.

Lipacis highlighted the fact that Nvidia's data center business nearly tripled on a year-over-year basis for the third consecutive quarter. In the most recent quarter, sales rose to $1.6 billion on an annualized basis. Perhaps more important, this is happening at the same time Intel Corporation INTC's data center business is decelerating.

"This supports our thesis that the center of gravity of computing is drifting toward a parallel model from a serial one," Lipacis wrote. "We think the Street is underestimating the secular nature of this shift and how it will benefit Nvidia."

Consistent Message From AI Players

Lipacis noted that his firm recently hosted three artificial intelligence themed conferences and the main takeaway from each is the same. Specifically, startups and cloud players all say the only reason they're able to operate is because of Nvidia's GPU and software.

The analyst also argued Nvidia's multi-year investments in CUDA and its APIs has resulted in the company sitting in a position where it is "years ahead" of the competition.

"Said another way, Nvidia + CUDA appears to be emerging as the 'Wintel of AI.," the analyst added.

See Also:

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