Nvidia's primary competitor, Advanced Micro Devices (AMD), recently introduced its artificial intelligence (AI) chips as a contender in the market. However, BofA Global Research remains optimistic about Nvidia's position in the industry.
Analyst Vivek Arya has reiterated his "Top Pick" Buy rating for Nvidia stock and reaffirmed the $700 price target for the shares. While AMD unveiled its Instinct MI300X accelerators for data center customers and server makers, Arya believes that Nvidia's multi-year roadmap and consistent product releases give it an edge over the competition.
Nvidia's upcoming releases include the H200, a follow-up to the H100, scheduled for next year. The company also plans to launch the B100 GPU by the end of 2024. Arya expects Nvidia's leadership in the AI model-training market to translate into success in the inferencing market, which involves generating answers from AI models.
The positive outlook is further supported by Nvidia's attractive valuation, currently trading at approximately 22 times its expected per-share earnings in 2024. Arya predicts a significant earnings growth of 55% to 60% year over year.
While Nvidia is facing supply constraints, the situation is gradually improving with each quarter. Additionally, the company's relationship with customers who take time to design new AI data centers provides multi-quarter growth visibility.
With its robust software programming ecosystem, CUDA, Nvidia continues to dominate the market for AI chips. Start-ups and corporations prefer Nvidia's products due to their reliability and efficient software capabilities.
In summary, despite increased competition from AMD, Nvidia remains at the forefront of the AI chip industry. Its strong product roadmap, favorable valuation, and established market dominance position it well for continued success.