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Nvidia expected to have a strong quarter on continued spending on AI, according to Wedbush.
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Tech companies are still in the early stages of investing in AI hardware, which is driving demand for Nvidia’s AI chips.
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Major customers like Foxconn and Supermicro are reporting profits from AI, boosting Nvidia’s outlook.
Nvidia is expected to soon report another strong quarter in terms of earnings as the AI spending boom is in full swing, according to Wedbush Securities.
The investment firm, which has dubbed Nvidia founder Jensen Huang the “Godfather of AI,” said it remains bullish on the chipmaker ahead of its second-quarter earnings report on Aug. 28. $1 trillion “tidal wave“As AI spending has been predicted by Wedbush before, tech companies are still in the early stages of investing in AI hardware, according to Matt Bryson, Wedbush’s senior vice president of equity research.
“What’s fueling this phenomenon is that there’s still a lot of spending on the AI chips that Nvidia makes,” Bryson said in an interview with CNBC Monday, noting that the recent drop in Nvidia shares stemmed from concerns that demand for the company’s AI chips was declining and there could be problems with Blackwellits next-generation GPU.
But some of Nvidia’s biggest customers reported healthy profits, thanks in part to increased investments in AI. Foxconn, a major buyer of Nvidia chips, saw its profit rise 6% in the most recent quarter, largely due to “strong growth momentum” from its AI servers. Supermicro, another big Nvidia customer, also reported “good” sales and beat revenue estimates in the most recent quarter, despite coming in below expectations, Bryson noted.
“The recovery is tied to a lot of recent data suggesting that spending on AI is simply not slowing down,” he added.
The integration of AI into personal devices could also represent a major tailwind for the semiconductor industry, as it will fuel increased demand for AI content, Bryson predicts.
Nvidia delays the release of its Blackwell chips It probably doesn’t matter in the grand scheme of things, he added, assuming the company is on track to deploy the chip from here on out.
“Everyone is committed to spending on AI “So we have another year of high spending on AI,” Bryson said. “I still have a buy rating and I think we’re going to get another quarter from Nvidia that, again, is better than expected. They’re doing it consistently. There just doesn’t seem to be any change in the dynamics of their customer base.”
Some analysts have grown skeptical of Nvidia’s runaway success, with its stock up a whopping 3,021% over the past five years as more tech companies have rushed into the AI space.
Some analysts, however, believe that demand for Nvidia chips is set to decline. Some of Nvidia’s biggest customers, such as Meta, Alphabet and Amazon, are already working on their own chips Or invest in other partnersaccording to an analyst who predicted a
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