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Nvidia is expected to have a strong quarter amid continued spending on artificial intelligence, according to Wedbush.
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Tech companies are still at an early stage of investing in AI hardware, which is driving demand for Nvidia's AI chips.
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Major customers like Foxconn and Supermicro are reporting that they are making profits from AI, which bolsters Nvidia's outlook.
Nvidia Microsoft is expected to post another strong quarter of earnings as the AI spending boom reaches its peak, according to Wedbush Securities.
The investment firm — which has dubbed Nvidia founder Jensen Huang the “godfather of artificial intelligence” — said it remains bullish on the chipmaker ahead of its second-quarter earnings report on Aug. 28. 1 trillion dollars “tidal wave“The AI spending that Wedbush previously forecasted is in the works, as tech companies are still in the early stages of investing in AI hardware,” said Matt Bryson, senior vice president of equity research at Wedbush.
“What’s fueling this is the massive spending on AI chips that Nvidia makes,” Bryson said in an interview. cnbc On Monday, a report suggested that the recent sell-off in Nvidia shares was driven by concerns about declining demand for the company's AI chips, and that there could be issues with Blackwellnext-generation graphics processing unit.
But some of Nvidia’s biggest customers reported healthy profits, in part due to increased investment in AI. Foxconn, a major buyer of Nvidia chips, saw its profits rise 6% last quarter, largely due to “strong growth momentum” from its AI servers. Supermicro, another major Nvidia customer, saw “impressive” sales and beat revenue estimates last quarter, despite not turning a profit, Bryson noted.
“The recovery has to do with a number of recent data points that suggest AI spending is not slowing down,” he added.
Bryson predicted that the integration of AI into personal devices could also be a major boost for the semiconductor industry, as it will increase demand for AI content.
Nvidia Blackwell delays launch of its chips He added that it's also likely that this “doesn't matter” in the grand scheme of things, assuming the company is on track to roll out the chip from here on out.
Everyone is committed to Spending on artificial intelligence “With the launch of Blackwell. So you’ve got another year of high AI spending,” Bryson said. “I still have a ‘buy’ rating and I think we’re going to have another quarter from Nvidia, which again, is another outperformer and an increase. They’ve been doing that consistently. There doesn’t seem to be any change in momentum from their customer base.”
Some analysts have become skeptical about Nvidia's runaway success, with the stock surging a whopping 3,021% over the past five years as more tech companies rush into AI.
However, some analysts have argued that demand for Nvidia chips is bound to wane. Some of Nvidia’s biggest customers, including Meta, Alphabet, and Amazon, have already started to abandon their products. working on their own chips or Investing in other partnersAccording to one analyst who predicted, long term decline For the stock.
Read the original article on Business Insider
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