• Hype about artificial intelligence
• NVIDIA stock boosted by this development
• Focus on CPU vs. GPU technology
In the past quarter, sales at the chip group NVIDIA fell by 13 percent compared to the same quarter last year to only 7.19 billion US dollars. Nevertheless, the NVIDIA share experienced a price firework, because on the one hand, the proceeds were still better than expected by market observers. On the other hand, it was well received that the business with technology for data centers developed positively, with sales climbing by 14 percent to a record value of 4.28 billion US dollars.
However, the view in particular created a festive atmosphere. The graphics card specialist expects sales of around eleven billion US dollars for the quarter running up to the end of June, exceeding the average analysts’ expectations by around 50 percent. According to the German Press Agency, NVIDIA CEO Jensen Huang spoke in a conference call of “incredible orders” for upgrading data centers. They would be geared more towards AI applications.
NVIDIA confirms boom in artificial intelligence
According to NVIDIA, the demand for capacities for artificial intelligence (AI) applications is currently growing enormously. The company can benefit greatly from this, because the NVIDIA technologies originally developed for graphics cards have also proven themselves for AI applications. In the past few months, the chatbot ChatGPT and software that can generate images based on text descriptions have triggered a real AI hype. Many companies want to keep up with such applications, which increases the need for specialized technology in data centers. This also arouses many fantasies among investors.
These stocks benefit from industry giants
In the wake of NVIDIA, the shares of some other industry giants also made significant gains, including ASML and Taiwan Semiconductor Manufacturing (TSM). While the Dutch ASML produces machines for NVIDIA, TSM supplies GPU technologies to NVIDIA.
As “Investopedia” reports, Wedbush analysts also assume that cloud providers are the “main winners” from NVIDIA’s increasing supply of data centers. For example, the shares of Super Micro Computer, a cloud and AI company that cooperates with NVIDIA, have recently made a strong jump in price.
Intel and AMD shares are at a disadvantage
However, the entire industry would not benefit, it said, because the focus is moving away from CPU and towards GPU technology. This is due to the fact that GPUs (Graphical Processing Units), in contrast to classic processors (CPUs), work in parallel and in a bandwidth-optimized manner. They are therefore better suited for computationally intensive processes – especially in the areas of artificial intelligence, machine learning and deep learning.
This is at the expense of Intel and AMD, the two dominant CPU market players. NVIDIA, on the other hand, is the market leader in GPU technology. After recently announcing record sales in its data center technology business, the company said CPUs were being left behind in this space.
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