The game on Wall Street right now: Trying to figure out when the current demand cycle for Nvidia ‘s artificial intelligence processors will go bust. The problem: Conventional scorekeeping for chip companies may miss the scale of Nvidia’s opportunity ahead. That’s our takeaway from Nvidia’s appearances at investors conferences over the past two days, beginning with Morgan Stanley’s tech and media event Monday followed by TD Cowen’s health-care symposium Tuesday. Management covered a range of topics during their presentations, but we’re drawing a common conclusion from them: As much as Nvidia’s business has expanded and its stock has soared over the past 18 months amid the generative AI boom, its best days are ahead of it. Nvidia CFO Colette Kress provided support for this outlook Monday, reiterating that customer interest in its next-generation AI chips may outpace supply at launch, despite the company’s efforts to ramp up supply in conjunction with manufacturing partners; the company has faced shortages with its current top-of-the-line chip, the H100, since last year. Crucially, she said Nvidia’s close relationships with customers, including cloud-service providers, enable the company to have confidence about that future demand. The sources of the demand are broadening, Kress said, helping establish a long runway for expansion. The finance chief said this includes burgeoning interest from countries outside the U.S. in training AI models that reflect their own language and culture — similar to how OpenAI’s ChatGPT generally reflects U.S. lingo and culture. Essentially, the kind of investment into AI that has happened in the U.S. over the past year is increasingly being replicated internationally. More broadly, Kress said Nvidia believes its reasonable to assume the company’s long-standing $1 trillion data center opportunity is just the beginning, as the use cases for generative AI — and the kind of accelerated processing enabled by Nvidia’s cutting-edge chips — reach industries that previously were not thought as needing intensive computing power. NVDA 1Y mountain Nvidia’s stock performance over the past 12 months. One such industry is health care. And on Tuesday, Kimberly Powell, the vice president of Nvidia’s health-care business, on Tuesday detailed the chipmaker’s vast opportunity to further integrate AI into that industry, ranging from surgery to medical imaging to drug discovery. “Health care will be the largest technology industry in the coming years,” Powell predicted at the TD Cowen conference. While Nvidia’s work on AI models for drug development has been well-documented, its focus in other areas of health care haven’t received as much attention. However, Powell said Nvidia’s previous work on autonomous driving help the company’s push into new corners of that market. “A self-driving car and a surgical robot are actually very, very similar in the job and the tasks that they do and the computing platforms that they need,” Powell said. Nvidia’s presentations didn’t detail brand-new products and services, necessarily — the company is no doubt saving any major updates for GTC, its highly anticipated AI developer conference set for March 18 through March 21. Nevertheless, they reinforced an important point for investors in an “own it, don’t trade it” position like Nvidia: Don’t miss the forest for the trees. Don’t concern yourself with every 10-point swing in the stock, even though it’s been a major outperformer since the launch of ChatGPT in late 2022 sparked a wave of AI investment— more than tripling in 2023 and up another 73.6% already in 2024. We think the advancements and innovations that recently vaulted Nvidia into the $2 trillion market capitalization club also have laid the groundwork for even more growth in the decade ahead. (Jim Cramer’s Charitable Trust is long NVDA. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
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The game on Wall Street right now: Trying to figure out when the current demand cycle for Nvidia‘s artificial intelligence processors will go bust. The problem: Conventional scorekeeping for chip companies may miss the scale of Nvidia’s opportunity ahead.
