Nvidia’s talk of huge market opportunities in autonomous driving and robotics is ‘potentially comforting for investors thinking about what might come next for the company’
Nvidia Corp. shares have turned lower Wednesday, adding to sharp losses from a day earlier, even as analysts urged investors to think big picture.
While Chief Executive Jensen Huang’s Monday night keynote didn’t impress Wall Street, executives got another crack at things with a Tuesday afternoon analyst meeting, which touched on everything from attempts to get more on the specifics of January-quarter guidance to management’s perceived opportunity in areas like robotics and autonomous driving.
Nvidia’s stock (NVDA) is down about 1% in Wednesday’s session after it had been up as much as 2.7% earlier in the trading day. It lost 6.2% on Tuesday.
See also: Quantum-computing stocks sink as Nvidia CEO delivers a reality check
Analysts saw some upbeat signs, particularly when taking a wide lens. “While we understand the near-term concerns around constraints limiting upside into the April quarter, we believe this is minutia compared to the real question – ‘how big can this get?'” Melius Research analyst Ben Reitzes wrote.
He noted that Huang’s comments support the view of a massive opportunity ahead. For example, Nvidia’s management has been discussing how $1 trillion worth of traditional data-center infrastructure is being moved over to accelerated computing like what the company’s technology supports. But Huang also rolled out some math Tuesday about autonomous vehicles, which could translate into another $2 trillion to $3 trillion in market opportunity.
“Then he went into how it was going to be the same for robots – and there would be more robots than humans,” Reitzes wrote. “So before what was not too long – you got the point – each major application was creating trillions in data center infrastructure that would run AI – for training, inferencing – ingesting synthetic and actual data – each bigger than the next. So his answer was clear – Nvidia intends to keep growing and its leader thinks its TAM [total addressable market] is in the multiple trillions of dollars.”
Bernstein’s Stacy Rasgon also touched on the potential of “physical” AI.
“It is not hard to imagine applications like these as further extending Nvidia’s runway far out into the future,” he wrote, given the math of $2 billion to $3 billion in additional data-center spending for every million or so autonomous vehicles that go out there, plus the growth potential in humanoid robots.
That vision is “potentially comforting for investors thinking about what might come next for the company.”
Read: 10 stocks making best use of investors’ money. Here’s who beats Nvidia.
He highlighted as well that Huang weighed in on the debate over graphics processing units versus application-specific integrated circuits, like those made by Broadcom Inc. (AVGO) Given Broadcom’s upbeat long-term market forecast issued last year, analysts and investors have been considering whether ASICs look poised to take market share from GPUs in part due to their lower price point.
Opinion: Broadcom’s projections show more evidence of the AI boom expanding beyond Nvidia
“Given the dynamism apparent in the space Jensen (while admittedly talking his book) clearly views the company’s GPU-based programmable platform approach as superior to ASICs given one doesn’t necessarily know what the next killer application might be, hence advantaging a flexible platform” Rasgon wrote.
As for Monday’s keynote, Rasgon noted that it’s true that “there was not much incremental on the data-center business,” which is Nvidia’s massive, AI-fueled engine right now. But CES is a consumer-electronics show and “not really the forum for that anyway,” according to Rasgon. Plus, Nvidia’s GTC conference will take place in March.