OpenAI's latest valuation of more than $150 billion, plus Nvidia Corp's (NASDAQ:NVDA) "watershed" partnership with Accenture Plc (NYSE:ACN), indicates that the "AI tidal wave" of spending is hitting its next growth stage, according to a research note from Wedbush analyst Dan Ives.
Nvidia and Accenture announced an expanded partnership on Wednesday to help enterprises rapidly scale AI adoption.
"Accenture will be a key player on the AI Revolution and this is a smart strategic partnership in our view that is the tip of the iceberg on the broader AI Revolution and demand adoption into 2025 and beyond," Ives said.
AI starts with Nvidia, but the transformation is taking place across the broader tech space, Ives said.
For every $1 spent on an Nvidia GPU, there is an $8 to $10 multiplier across the tech sector, he adds. This reinforces Wedbush's bullish view for tech stocks over the next year, especially when coupled with the news out of OpenAI this week.
OpenAI announced Wednesday that it secured $6.6 billion in new funding at a valuation of $157 billion. Ives called it "eye popping."
The company plans to use the funding to accelerate AI research, increase compute capacity and continue building tools to solve complex problems.
Ives called OpenAI a "key foundational linchpin" of the AI thesis given that the company's ChatGPT product acted as the world's "iPhone moment" in terms of generative AI.
"Now we are seeing a $1 trillion of AI Capex over the next three years as OpenAI has been the linchpin to AI success and adoption we are seeing at Nvidia, Microsoft, Google, and across the tech world," Ives said.
Ives noted that there is essentially a fourth Industrial Revolution taking place across semiconductors, software, infrastructure, smartphones and internet. He anticipates a tidal wave of AI spending on the buildout over the next 12 to 18 months.
"We also believe OpenAI now has a much more functional corporate structure which is a positive for the broader tech industry given how important Altman & Co. have become to the AI Revolution," Ives said.
OpenAI is restructuring its core business into a for-profit corporation that won't be controlled by its non-profit board. The OpenAI non-profit will reportedly remain in place and take a minority stake in the for-profit company, per Reuters.
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