Jensen Huang, co-founder and CEO of Nvidia Corp., showcased the new Blackwell GPU chip at the Nvidia GPU Technology Conference on March 18, 2024. This announcement coincided with Nvidia’s shares surging over 11% on Wednesday, following optimistic commentary from key customer Microsoft and rival AMD regarding the continued expansion in AI server infrastructure.
Microsoft CEO Satya Nadella and CFO Amy Hood indicated intentions to increase spending on Nvidia-based infrastructure in the upcoming year, after already allocating $19 billion in capital expenditures this quarter, 60% of which went towards hardware. Microsoft pointed out that its investments in GPU-based servers are yielding returns, alleviating investor concerns that Nvidia’s elevated AI sales were merely a result of competitive pressures among cloud providers which might be slowing down.
“This could reassure most Nvidia/semis investors, given Microsoft’s capex was significantly higher than anticipated,” noted UBS analyst Karl Keirstead.
Nvidia has been the main beneficiary of the AI boom, with its stock doubling in 2024 and surging over 500% since the release of ChatGPT in November 2022. Morgan Stanley analysts named Nvidia a “top pick,” predicting that worries about competitive dynamics, export controls, and supply chain issues will dissipate over time. Analyst Joseph Moore emphasized the market’s positive outlook on generative AI development, noting an imminent transition from Nvidia’s “Hopper” H100 chips to the new Blackwell generation, potentially boosting sales.
Nvidia’s primary competitor, AMD, further reinforced this optimism. CEO Lisa Su reported strong GPU demand and raised the company’s AI chip sales forecast to $4.5 billion for the year, an 11% increase from previous estimates. These updates from AMD and Microsoft counter rising concerns about potential overinvestment in AI infrastructure.
Goldman Sachs analyst Toshiya Hari echoed this sentiment, suggesting sustained capital expenditures by Microsoft and robust forecasts from AMD bode well for Nvidia. Nvidia is scheduled to report its fiscal second-quarter earnings in August, setting the stage for further market developments.
Original Story https://www.cnbc.com/2024/07/31/nvidia-stock-up-after-microsoft-amd-quell-fears-ai-buildout-too-fast.html
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