Raymond James said
The new artificial intelligence cloud offering for enterprises could become big business over time.
Analyst Srini Pajjuri on Thursday reaffirmed his strong buy rating for
stock (ticker: NVDA) and its price target of $450.
Earlier this year, Nvidia unveiled its DGX cloud service, which allows companies to rent AI computing capacity powered by the chipmaker’s semiconductors.
Nvidia DGX Cloud’s AI-as-a-Service is a significant long-term opportunity, he wrote. The chipmaker has “AI models that companies can leverage to create large, custom language models with proprietary enterprise data.”
In early trading on Friday, Nvidia shares rose 3.7% to $423.46.
Pajjuri noted how the company’s management said there are four million developers using Nvidia’s CUDA programming platform. CUDA, with its useful software tools and AI-related libraries, laid the foundation for Nvidia’s chips to dominate in the latest wave of AI applications.
Nvidia’s products are heavily exposed to generative AI, which is all the rage this year. The technology brutally ingests text, images, and videos to create content. Interest in this form of AI was sparked by OpenAI’s release of ChatGPT late last year.
The analyst also expressed confidence in Nvidia’s ability to generate strong financial results, citing upcoming AI-related product launches later this year.
After a recent meeting with Simona Jankowski, Head of Investor Relations and Strategic Finance at Nvidia, “we came away comfortable with our view that Gen AI adoption will continue to drive strong growth over the coming quarters,” he wrote.
As for potential competition, “Nvidia’s AI ecosystem advantage would be hard to match,” he added.
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