Chip maker Nvidia has been a key beneficiary from the investor frenzy over AI.
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Nvidia
stock has come under pressure after a recent report that OpenAI is exploring plans that could cut out the chip maker as a supplier. But there remain good reasons to stay bullish on Nvidia.
OpenAI, a leader in artificial intelligence backed by
Microsoft
(MSFT) whose launch of the ChatGPT chatbot kicked off an AI investing frenzy, is exploring making its own AI chips, Reuters reported late last Thursday, citing anonymous sources. Amid a shortage of chips to fuel AI growth, OpenAI is also considering options including working more closely with chip makers like Nvidia (ticker: NVDA) or diversifying its suppliers beyond the company, the report said.
OpenAI did not immediately respond to a request for comment from Barron’s.
Nvidia is a key supplier of graphic processing units (GPUs) and application-specific integrated circuit (ASICs)—chips that are critical in powering the advanced computing behind artificial intelligence. The chipmaker’s exposure to AI has been a major force behind its financial success this year, which had sent Nvidia stock more than 210% higher since the start of January.
“We continue to expect Nvidia to maintain ~90% share in the AI GPU market for the next 2-3 years,” analysts at Citi wrote in a note Friday. The analysts added that the Reuters report, if true, would be not so surprising—and consistent with the view that GPUs and ASICs will be needed to ramp up necessary infrastructure in AI.
“We foresee ASICs being primarily used for smaller and more specialized models and GPUs for both training and inference of larger/more complex models,” the analysts said.
Nvidia stock was down 2.2% at 10:23 a.m. on Monday, underperforming both the
S&P 500
and
Nasdaq
Composite, which were down 0.2% and 0.5%, respectively.
Write to Jack Denton at [email protected]
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