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Wednesday, June 19, 2024

Nvidia Shares Hold Steady Following Unveiling of Cutting-Edge AI Chips

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NVIDIA’s CEO Jensen Huang expressed during an analyst meeting the company’s aspirations to expand its presence in the $250 billion data center market, a move that lifted the stock on Tuesday afternoon from the previous decline. Huang’s remarks came a day after the unveiling of NVIDIA’s latest generation of artificial intelligence chips called Blackvel and a new AI software platform.

“In order to run software more efficiently, you can create chips, but you can’t create a new market without software. What sets us apart is that I believe we are the only chip company that will create its own market,” he said during Tuesday’s meeting.

Huang announced the launch of new chips at NVIDIA’s developer conference in San Jose, California, on Monday, describing them as even more powerful processors than the current generation of Hopper graphics processing units, which have seen high demand for running large AI models. The first Blackvel chip, GB200, will ship by the end of this year.

During an interview with CNBC’s “Squawk on the Street” on Tuesday, Huang held one of the new chips in his hand and said, “We had to invent some new techniques to make this possible.” He estimated the price of a chip could range from $30,000 to $40,000, with a research and development budget for the processor of about $10 billion.

The company also announced a new enterprise software product called NVIDIA Inference Microservice, which simplifies running older generations of NVIDIA GPUs.

Analysts at Bernstein wrote in an investor note on Tuesday, “Move over, Taylor Swift, you’re not the only one who can sell out stadiums as Jensen presented his GTC keynote in front of a packed crowd at San Jose’s SAP Center.” They maintained their overweight rating on the stock with a $1,000 price target.

Analysts at Wells Fargo reacted to the chipmaker’s announcement with guarded optimism, doubling down on their overweight rating on NVIDIA shares and raising their price target from $840 to $970.

“Although NVIDIA has once again shed light on its full-stack/platform bias, we think some were hoping for a bit more from the Blackvel B200 launch,” analysts wrote.

Still, analysts at Wells Fargo wrote that the news has affirmed their “long-standing positive thesis” on NVIDIA’s technology and monetization opportunities.

Goldman Sachs analysts maintained their buy rating on NVIDIA stock, raising their price target from $875 to $1,000 on Tuesday and praising NVIDIA’s innovations, customer and partner relationships, and critical role in the AI space.

Analysts wrote in a note to investors, “Based on our recent industry conversations, we expect Blackvel to be NVIDIA’s fastest-ramping product in history.” “NVIDIA has played (and will continue to play) a critical role in democratizing AI across several industry verticals.”

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