I’ve been accused of being a booster for Nvidia. And I’ve definitely been posting a lot on it. But it is, according to Goldman Sachs, “the most important stock in the world.”
And we only have to look at the earnings call and how it snapped a sinking market back forward again adding more money to its cap in a day than any stock in history.
Okay. Rah rah. But what about the competition? That much money and someone(s) are gonna try and steal a piece and poach your employees.
So this one is for the nays and even the yays like me who want perspective.
From MarketWatch opinion piece:
The Nvidia bandwagon is packed and everyone is jumping on it. It’s fun to be right and more fun to be right in good company. But what if everyone is wrong? Isn’t it this type of mania and exuberance that should give the market pause?
Nvidia has effectively grown to more than 98% of the market for data-center graphics processing units, or GPUs, due to a complete lack of meaningful competition. This early lead has given the company unbounded pricing power, driving its margins in the most recent quarter to over 76%.
over the past few months we have seen signs of competition entering the market. This will affect Nvidia’s margins and the company’s ability to continue to grow at such a staggering rate.
the competition is coming from an array of places [in addition to AMD who is predicting $4B for their new GPU] that include a number of Nvidia’s largest and most important customers. For example, Amazon.com Inc.’s AWS cloud has its AI chips for training and inference, Microsoft recently announced its Maia AI chip, and Alphabet Inc.’s Google continues to innovate on its Tensor Processing Units (TPUs). Oracle Corp. and Meta Platforms Inc. are also developing AI chips in house.
not as much an indictment on Nvidia as they are a realization by these companies that overdependence on a single source for AI semiconductors is a risk
In short, competition is real and it is coming to Nvidia in a meaningful way. More competition pressures Nvidia’s pricing, margins and market share, as well as its rates of revenue and EPS growth.
Submitted February 24, 2024 at 12:34AM by dukerustfield https://ift.tt/pY54XnW
