NEWSLETTER
It seemed science fiction until November 2022, when Openai's chatgpt caused a wave of interest in the real world potential of artificial intelligence.
Since then, almost all industries have experienced a whirlwind of ai activity.
Banks are using ai risks for coverage, medication manufacturers are investigating their use to develop better medications more quickly, manufacturers are using it to improve productivity and retailers use it to improve supply chains. The military are even considering how ai can help on the battlefield.
Do not miss the move: Subscribe to the free newspaper of Thestreet
In the center of all this interest is Nvidia, the largest manufacturer in the world of graphic processing units, or GPU, ideal for training and executing chatbots of ai such as Chatgpt, GEMINI of Google and the Microsoft co -pilot.
Nvidia chips demand has been so strong that its income and profits have shot, carrying the stock to possibly stratospheric levels.
The price of Nvidia shares recovered 171% alone in 2024, which raises great questions about whether the company's valuation, which now exceeds $ 2.8 billion, extends.
<img src="https://www.thestreet.com/.image/c_fit%2Ch_800%2Cw_1200/MjExOTUzMjE0NTc5Mjg4MDQw/us-computers-internet-technology-ces.jpg”>
The biggest player in a rapid growth market
Some of the largest technology companies have increased their expenses to capitalize on the opportunity for ai.
Related: Fund Administrator that predicted Nvidia Rally renovations of the actions of the actions
In 2024, Meta Platforms, Microsoft, Google and the Capital expenses of amazon totaled $ 230 billion, compared to $ 144 billion in 2023. In 2025, this expense is expected to increase again at $ 325 billion. Much of the increase has been used to update the oldest servers and silicon chips necessary to feed them in networks in the cloud.
Nvidia is at the forefront of this trend thanks to its high -power GPUs, which were better known for promoting video game consoles and cryptocurrency mining before the ai boom.
The increase in demand catapulted NVIDIA to $ 130 billion in 2024 of approximately $ 27 billion in 2023.
With so much money at stake, Nvidia is taking dollars in research and development to avoid rivals, including micro advanced devices, which launched their own ai chips last year, and companies such as Broadcom, which is working with OpenAi to develop their own chips.
The potential is undeniably large.
Last October, AMD CEO, Lisa Su, said the GPU market could grow to $ 500 billion in 2028, or more than 60% per year.
Nvidia assessment is under the microscope
Technological actions such as Nvidia are not known for being cheap. Often, they order higher than the market price (p/e) multiples.
Related: The veteran analyst offers the prediction of the expenses of ai as the concerns assemble
It is not uncommon to find rapid technology actions that are negotiated with P/E relationships in the two high digits. Some high flyers have also seen triple digits multiples that eclipse the average s&p 500 ratio of approximately 22.
Given the enormous intensity of Nvidia, the debate has grown over whether the price of Nvidia's shares has advanced itself.
Stacy Rasgon, an analyst at Bernstein Société Générale Group, is the last analyst involved in the debate. Rasgon's version about Nvidia assessment may surprise you.
The price of Nvidia's shares fell around 15% this year as investors became anxious for the probability that the expenditure of IA continues to grow rapidly.
Rasgon discovers that he releases “a bit impressive”, noting that Nvidia is only accelerating Blackwell's sales, his new generation of ai chips.
“After yesterday's defeat, the actions are quoted at ~ 25 times the NTM profits (next twelve months), their weakest level in a year and about 10 years,” Rasgon's team wrote in a research note for customers. “In fact, the action now quotes below parity in relation to the Sox (something we have seen only once or twice in the last decade) and with only a slight S&P premium, the lowest since 2016 have been.”
The 5 -year P/E bass of Nvidia is 26.
The Sox is the philadelphia semiconductor index, which includes 30 of the largest semiconductor actions.
The last quarter, Nvidia sold $ 11 billion in Blackwell chips. In his telephone conference of the quarter quarter, the CEO of Nvidia, Jensen Huang, said it was the fastest ramp in Nvidia's history.
“Our conversations after earnings with the company indicated the $ 11B in the Blackwell income of FQ4, all sent in January (suggesting that the gates are now open) and the company indicated that the demand will continue to exceed the offer during the next quarter as they increase,” Rasgon added.
More nvidia:
- The Startup backed by NVIDIA could be the best technological leaving of the year
- Fund Administrator that predicted Nvidia Rally renewal of the shares of the shares
- Surprising news news NVIDIA Price of the shares
If it is true, then Blackwell's sales could continue to support NVIDIA's income, and once production is on a scale, profitability should be recovered.
The gross margin is expected to fall to 71% this quarter. It was 73% the last quarter, below 76% in the previous year. Nvidia says that she should recover at a margin of mid -70% at the end of this year.
Blackwell's sales potential and the possibility of a rebound on the margin could mean that Nvidia is on the bargain shelf, given its relatively low -comparation relationship compared to its historical levels.
“The valuation is becoming increasingly attractive,” said Rasgon.
The price objective of the price of Bernstein shares is $ 185.
Related: The veteran fund manager presents a striking prognosis S&P 500
