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Here are the takeaways from today’s Morning Brief. sign up Every morning you will receive the following message in your inbox:
I have a confession to make before the new year.
Nine years ago, I had never heard of Nvidia. I’m not proud of this because I love investing, I love eating, sleeping, and breathing. What can I say, this company wasn’t even on my radar screen.
Ever since my former boss, Jim Cramer, began discussing the company’s chip advances daily inside TheStreet’s headquarters, I’ve had intelligent conversations with the titan and even the goal of writing stories for him. So I started looking into the company in detail. Jim was way ahead of his Nvidia story. He’s just a phone call away.
Since then, Nvidia (NVDA) has truly captured the hearts of investors and corporate executives who are using the company to support their AI expansion. Just this year, Nvidia’s market cap topped $1 trillion for the first time (it’s currently $1.2 trillion, according to Yahoo Finance data).
On average, Wall Street analysts predict that NVIDIA’s profits will rise nearly 70% over the next year (and probably much more). Additionally, Nvidia’s trailing 12-month price-to-earnings ratio (P/E) was 64 times, nearly three times that of the S&P 500.
The H100 AI chip isn’t fast enough and remains in short supply.
Companies like CoreWeave raise debt backed by their own Nvidia chips (which is kind of crazy, given the speed at which technology advances and the risk of asset value declines). Nvidia founder Jensen Huang (who started the business out of a Denny’s in 1993) has reportedly produced many billionaires within his company and warns them not to get fat or lazy. It is being
From the outside looking in, everything seemed to be going Nvidia’s way for the past decade. I’m sure there have been challenges for management and lower-level employees, but the company has continued to win against the board for investors.
I’m not saying here that NVIDIA’s winning ways won’t continue into 2024. The company has won big, putting it well ahead of its rivals in chip development. But what I want to say today is that the competitive gap between us and our two hungry rivals is narrowing.
Nvidia bulls would be wise to do some competitive analysis on AMD (AMD) and Intel (INTC).
A few weeks ago, AMD announced a cutting-edge chip targeting generative AI.
Coined MI300x, it can use up to 192 GB of memory and boasts a whopping 153 billion transistors. AMD CEO Lisa Su highlighted the chip’s potential for better performance compared to its “competitors,” but this is a not-so-thinly veiled reference to NVIDIA. It was mentioned.
The considerable memory capacity means AMD’s new chips can be used to train large-scale language models such as OpenAI’s ChatGPT, commonly known as “LLM.”
Hsu told me that this chip alone could generate $2 billion in sales by 2024.
Meanwhile, Intel is starting to regain its vitality under CEO Pat Gelsinger after a difficult 2022 and the first half of this year.
A week ago, Intel introduced a variety of products and services involving artificial intelligence. On display was Gaudi3, an artificial intelligence chip for generative AI software. The chip is expected to be officially launched next year.
The Street gave the new chip solid reviews.
Gelsinger said the company is ramping up production of these new chips “like crazy” to become a dominant player in the emerging AI PC market (see video above).
This three-way AI chip battle will be one to watch in 2024…and likely have a major impact on the stock performance of individual companies and the broader AI conglomerate. Don’t discount his challenger Nvidia fans.
Brian Sozzi I’m the executive editor of Yahoo Finance. Follow Sozzi on Twitter/X @BrianSozzi And even more linkedin. Have a tip about a deal, merger, activist situation, or more? Email brian.sozzi@yahoofinance.com.
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