Profit may continue to surge, but share price may hit parity
it is udnisputed that $NVIDIA (NVDA.US)$ has claimed the crown of “the winning stock of the year” , following the AI-led bullrun among the tech sectors in US market.
Owners of data center infrastructure such as $Alphabet-C (GOOG.US)$ $Amazon (AMZN.US)$ $Microsoft (MSFT.US)$ , and other major tech players for instance $Tesla (TSLA.US)$ , Huawei, $Baidu (BIDU.US)$ have been hoarding truck loads of GPU ，in order to “train” their own AI model platform .
Till date, apart from CharGPT of OpenAi , there are others AI model such as Mojo from Tesla, PanGu from Huawei , Bard from Google， WenXin from Baidu , which require thousands units of GPU.
These has diverted the capex spending pattern of these tech giants, from purchasing storage , switching to GPU .
There are only a few players among AI’s GPU, namely $NVIDIA (NVDA.US)$ , $Intel (INTC.US)$ $Advanced Micro Devices (AMD.US)$ $Cambricon (688256.SH)$ ，and NVIDIA commands the highest market share of up to 80% .
The sudden increaze in demand and lack of supply has pushed up the average selling price of Nvidia’s products, coupling with higher units delivered to customers , hence the revenue of Nvidia has been supercharging up to two folds comparing to few quarters ago.
Moving into 2024, although the demand of AI GPU still will be high, but it is estimated that there will be more competitions especially from peers such as Intel and AMD. Hence the profit margin and revenue growth percentage of NVIDIA will face some form resistance.
In a nutshell , it is likely that the share price may hit parity while the profit still grow amid at a lower pace.
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