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Nvidia (NVDA) had a big 2023 thanks to its AI chips and a well over 200% rise in stock price. But can that success carry over into 2024, given potential economic headwinds, increased competition, and restrictions on shipments to China?
Stifel Applied Technology Analyst Ruben Roy thinks it’s possible. He joins his Yahoo Finance to discuss why he thinks Nvidia is a good idea for investors’ portfolios.
Roy explains why Nvidia is so dominant in this space: “Nvidia invented the software stack CUDA, which is the current AI ecosystem. Apple (AAPL) and iOS So if you look at it, that’s what we think about.” So if we can get the developers, we can get the hardware… So that’s what’s next in the Nvidia story this year. I think it will come in stages. ”
For more expert insights and the latest market trends, click here to watch the full episode of Yahoo Finance Live.
Editor’s note: This article was written by Nicholas Jacobino
video transcript
[AUDIO LOGO]
Sheena Smith: Analysts remain bullish on NVIDIA after its stock price rose more than 200% in the last year. One of those names, Stifel, doesn’t expect AI’s momentum to slow down anytime soon, citing chip stocks as the “best idea” of 2024.
We want to bring in the analyst behind that call, Reuben Roy. He’s an analyst at Stifel Applied Technology there. Ruben, I’m glad you’re here. So I think a lot of people are wondering what exactly NVIDIA’s earnings will look like, at least over the next 12 months, given such a massive rally over the last year. So what is the trigger for this upward trend?
Reuben Roy: Yes, great question. And thank you for having me. So yesterday we published a trend report from Stifel’s technical team. And Top 10 Trends – We do this every year. And in fact, it was, of course, about AI. But it was more about expanding AI.
Last year, there was a lot of talk about NVIDIA, GPU clusters, and the huge amount of money that cloud service providers spent building training networks. But if you look beyond things like AI servers and AI PCs, a lot of AI innovations and applications are coming later. And what happens when you look at all the companies that could potentially benefit? NVIDIA checks all the boxes, right?
Therefore, NVIDIA is likely still active within the cluster. The investment cycle for AI training clusters will continue. But beyond that, when you think about the AI servers that run the next steps in AI, we think we’re doing training last year, training this year, and inference. Where will we make money? Where does the ROI come from?
And NVIDIA checks these conditions. So we think this year will be a good year. Last year that number increased significantly. But NVIDIA’s AI strategy has many layers. There’s the chips and the hardware, which is the biggest part, but behind that is the network that networks all these clusters together. And perhaps the most important part that investors will start thinking seriously about this year is software.
And NVIDIA invented the software stack CUDA, which is today’s AI ecosystem. If you look at Apple and iOS, our philosophy is that if you can get developers, you can get hardware. And I think that’s going to be the next stage of his NVIDIA story this year.
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