Nvidia friends beware! Two AI rivals are closing in (Reuters / Reuters)
Many Wall Street analysts believe that chip manufacturer Nvidia will be the biggest beneficiary of the future artificial intelligence revolution. In the past year, Nvidia’s market value exceeded US$1 trillion for the first time. According to Yahoo data, it is currently $1.2 trillion.
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Analysts on average predict Nvidia’s earnings will grow nearly 70% next year (possibly higher). Nvidia trades at 64 times trailing 12-month earnings, nearly three times the S&P 500.
Its H100 AI chip production is still not fast enough, and supply still cannot keep up with demand.
To understand how much the product is in demand, you have to know that companies like CoreWeave are pledging the Nvidia chips they own as collateral for loans (which is crazy, considering the speed of technology development and the risk of devaluation of such assets). Nvidia founder Jensen Huang, who conceived the business at Denny’s in 1993, has created a slew of millionaires within the company, reportedly warning them not to become fat and lazy.
From the outside, everything seems to be going in the direction of Nvidia over the past decade. I’m sure there are challenges for management and lower-level employees, but the company continues to deliver success after success for investors.
This is not to suggest that Nvidia’s path to success cannot continue in 2024. The company’s huge win has put it well ahead of its competitors in chip development. However, the competitive gap against two hungry rivals is closing.
Even if you are optimistic about Nvidia, you should rationally analyze the competitiveness of AMD and Intel.
AMD launched its most advanced chips for generative AI a few weeks ago.
The MI300x, as it’s called, can use up to 192GB of memory and has an astounding 153 billion transistors. AMD President Su Zifeng emphasized that the chip’s potential performance is better than “competitors” – an undisguised allusion to Nvidia.
The massive memory capacity means AMD’s new chips can be used to train large language models – such as OpenAI’s ChatGPT – commonly known as “LLMs”.
Su Zifeng told Yahoo Finance that by 2024, sales of this chip alone will reach US$2 billion.
Meanwhile, Intel is starting to show signs of life under President Pat Gelsinger after a difficult 2022 and first half of 2023.
A week ago, Intel showed off a series of products and services, all related to AI. Among them, Gaudi3 is an AI chip used to generate AI software and will be officially launched next year.
Wall Street gave the new chip a lot of praise.
Gelsinger told Yahoo Finance (video above) that he is “crazily” increasing production of these new chips with the goal of becoming the dominant player in the emerging market of AI PCs.
The battle between the three AI chip companies is one to watch in 2024… and may have a significant impact on the stock price performance of each company and the broader AI-related industry. Nvidia fans, don’t underestimate the challengers.
2024-01-02 04:14:29
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