Nvidia has recently been holding its annual GTC conference where the company showcased its latest developments in the world of GPUs and AI. However, despite the positive vibe around Nvidia, the stock price only rose slightly with shares initially down by 4% that day. Patrick Moorhead, the CEO of Moor Insights & Strategy, believes that this could be because investors were expecting something new, and while what Nvidia showcased was impressive, there is still a lot of analysis needed to understand the platform in-depth. Additionally, Nvidia’s upcoming new chip, Blackwell, which is due to release at the end of the year and is being compared to AMD, is also causing investors to hold off.
👉 Cost of chips: Chips in the hopper line usually sell for between $30,000 and $40,000, and while Blackwell chips are likely to be in a similar range, pricing will vary. The chip is made up of two chips stitched together in a good way, making them less costly. However, the company intends to keep both chips in the market, creating a good-better-best strategy with Blackwell being the best and Hopper being the better. Both will be sold at the same time.
👉 Rivals: Nvidia currently has almost 100% of the training market and between 90% and 95% of the inference for the latest models, and while the new platform is exciting, this is unlikely to maintain the company’s market share. However, the market is still growing, and it could be two to three times the size of the current market in two years, giving Nvidia, Intel, and AMD more room to grow.
👉 Ecosystem: Nvidia is not just a chip company. It is an ecosystem, with core accelerators, networking, and other products all connecting together to ensure that whether someone has a better chip or not, Nvidia’s platform is still competitive. This is like Apple who hasn’t necessarily had the best devices, but whose experience is so strong that it has remained competitive.
👉 Risks: The biggest long-term risk for Nvidia is that researchers will not be able to find applications that require bigger and faster chips, and in turn, this will mean the company is unable to improve its products, leading to less demand. Additionally, the risk of competition is always there, with customers possibly becoming unhappy about being locked into one supplier.
In conclusion, Nvidia is a company with an impressive range of products and services that extend beyond its core business of GPUs, although investors have remained cautious due to its upcoming product releases, a risk of supply issues, and other rival companies emerging in the market. However, the company is well-positioned to weather the storm and maintain its position in the industry.
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