Updated 30.5.2023 15:20
Artificial Intelligence Isn’t Going Anywhere. There’s a Groundbreaking Impact on Semiconductor Stocks.
NVIDIA has just achieved a significant milestone by crossing the 1 TRILLION market cap, highlighting its dominant position in the AI tech industry. Driven by strong demand for GPUs, the company’s growth prospects remain bright as the role of AI continues to expand across various industries. Nvidia’s CEO, Jensen Huang, proclaimed the dawn of a new age in computing during his recent speech at the Computex forum in Taipei. This advancement, he believes, signals the closure of the “digital divide”.
Nvidia, currently the world’s highest-valued publicly traded semiconductor company, has emerged as a key player in AI technology. The company provides integral components for AI-powered systems. Nvidia’s strong performance was evidenced in its recent Q2 revenue forecast, which surpassed Wall Street’s expectations by over 50% which we touched on in a previous article. The company also announced plans to increase its AI chip supply to address the booming demand.
Huang, spoke in front of thousands at Computex. He emphasized that AI is ushering in a new era in computing, asserting, “Every single computing era you could do different things that weren’t possible before, and artificial intelligence certainly qualifies”.
The Nvidia CEO also highlighted the ease of use of the new AI systems, stating that the “programming barrier is incredibly low”. He believes this accessibility is a significant factor contributing to the rapid progress and widespread adoption of AI across various industries.
Nvidia’s chips have been instrumental in enhancing human-like chat features in search engines such as Microsoft’s Bing. Further, Huang announced a partnership with WPP, the world’s largest advertising group, to create AI-generated content for digital advertising. However, the soaring demand for Nvidia’s AI chips has put pressure on the company’s supply chain. Tesla’s CEO, Elon Musk, humorously remarked last week that Nvidia’s graphics processing units (GPUs) are “considerably harder to get than drugs.”
Now, let’s consider the investment implications of this development.
- Nvidia (NVDA): Nvidia is at the forefront of the AI revolution. With its GPUs being crucial for AI applications and its leadership in the sector, the company stands to benefit significantly. Shares of Nvidia closed trading today up to $416.39 per share, up +39.37% this month. YTD, NVDA stock is up +165.32%.
- Microsoft Corporation (MSFT): As a user of Nvidia’s chips to enhance their AI capabilities, Microsoft could see increased efficiency and improved services, leading to potential growth.
Negatively Impacted Stocks:
- Advanced Micro Devices (AMD): AMD, a direct competitor to Nvidia, may need help to match Nvidia’s pace in the AI sector.
- Intel Corporation (INTC): Intel, another semiconductor company, could also face competitive pressures, particularly if it can’t keep up with the demand for AI-specific chips like Nvidia can.