Despite its impressive earnings, Nvidia’s stock didn’t see a significant boost. Nevertheless, the company made it clear that its rivals, such as Advanced Micro Devices (AMD) and Intel, have a long way to go in catching up when it comes to artificial intelligence chips.
During the earnings call following the October-quarter results, Nvidia executives emphasized their position as the largest player in AI chips. They didn’t entirely dismiss the competition but rather highlighted their commitment to maintaining their lead through a faster pace of technology development. Instead of releasing new products every two years, Nvidia is now aiming for annual releases to stay ahead.
CEO Jensen Huang explained that this accelerated execution is driven by a fundamental reason: cost reduction. By pushing the boundaries of technology development, Nvidia can maintain its dominance in the market.
According to Srini Pajjuri, an analyst from Raymond James, Nvidia is projected to maintain a market share of over 85% in generative AI accelerator chips next year. This market share solidifies their dominance.
Pajjuri also pointed out that some customers may temporarily halt their spending with Nvidia to wait for the release of the new B100 chips, slated for mass production in the second half of next year. However, this cautious approach could result in customers postponing their purchases of AMD’s MI300 AI chip or Intel’s Gaudi 3 chip, both of which are due to launch next year.
Nvidia’s Data Center Revenue Projected to Soar
Nvidia is expected to reach a significant milestone in its data center revenue. The company’s projected data center sales for the fiscal year ending January 2025 are estimated to be a staggering $65 billion. This is more than double the combined sales of Intel and AMD for the same period.
Despite facing competition from various rivals, Nvidia remains the go-to choice for training generative AI algorithms. This is primarily due to the exceptional CUDA software platform that Nvidia has been meticulously building for nearly two decades. Independent analyst Richard Windsor, who publishes Radio Free Mobile, acknowledges this as a key factor in Nvidia’s continued dominance in the market.
While Nvidia’s stock closed slightly lower at $487.16 compared to around $500 prior to the results announcement, analysts have maintained a positive outlook. The decline is attributed to profit-taking and concerns surrounding exports to China.
In addition to direct competitors like AMD and Intel, Nvidia faces emerging competition from its own customers such as Google-parent Alphabet and Microsoft. These tech giants have been developing their own custom chips, posing a potential threat to Nvidia’s position. However, Nvidia remains unfazed by this challenge.
Raymond James analyst Pajjuri agrees that Nvidia’s graphics processing units (GPUs) outshine custom solutions in terms of versatility and utility. The company’s management also shares this confidence in their products.
In conclusion, Nvidia’s data center revenue is set to skyrocket thanks to its superior technology and longstanding experience in the industry. Despite growing competition, the company’s position remains unshakable.
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