Nvidia will be reporting earnings today after the market close. In this report we lay out the long-term thesis for the stock.
As background, Nvidia has long been associated with high-performance GPUs, originally designed to accelerate graphics rendering mainly used in gaming. However, in recent years, these GPUs have become the backbone of Artificial Intelligence (AI) model training and inference.
Nvidia outlined a 1 trillion-dollar TAM over a year ago. What’s changed over the past year is that the transformer model, which was introduced in 2017, has finally gained broader adoption over the past six months, accelerating demand and broadening AI use cases. While AI was already incorporated in the TAM, the speed at which AI adoption has grown is the upside surprise and is resulting in a valuation boost for Nvidia’s stock.
By leveraging its AI expertise, Nvidia has developed a unique portfolio of not only hardware, but also software offerings aimed at democratizing AI, making the company well-positioned to benefit from the adoption of AI workloads.
Our Nvidia thesis is based on 3 pillars: (1) exponential growth in hardware (2) software introductions (3) automotive opportunity.
While we expect to see new entrants, it is very difficult to replicate the ecosystem that Nvidia built over the past 10 years around AI. Consequently, we expect that the company will be able to capture a meaningful part of the white space. For more info see our detailed report below:
Dive deeper into the three pillars of our investment thesis:
- The Hardware Opportunity
- The Software Opportunity
- Autonomous Driving
Find the full report here.
For more research visit spear-invest.com.
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