- Wednesday, October 16, 2024
According to Jefferies, Microsoft and Alphabet, the parent company of Google, have provided positive commentary on the outlook for Nvidia, the leading player in the market for semiconductors used in artificial intelligence (AI). Both tech giants have indicated their plans to make significant investments in AI infrastructure in the coming year.
During an earnings call with investors, Microsoft's CFO, Amy Hood, stated that they will accelerate their investment in cloud infrastructure to meet the demand for their AI platform. As a result, they expect capital expenditures to increase sequentially each quarter throughout the fiscal year.
Likewise, Alphabet's CFO, Ruth Porat, revealed that the company plans to make "elevated levels" of infrastructure investment in cloud data centers for the remainder of this year and expects continued growth in 2024. She specifically highlighted AI as the primary driver behind these investment plans.
Jefferies analyst Mark Lipacis reacted positively to these announcements, suggesting that Nvidia's future revenue could exceed their above-consensus estimates due to the increased AI spending and capital expenditures mentioned by Microsoft and Alphabet.
Nvidia currently dominates the market for AI chips and is well-positioned to benefit from the growing demand in this sector. Their products have a strong foothold in generative AI applications, such as OpenAI's ChatGPT, which utilizes text, images, and videos to generate content. This innovative technology has garnered significant attention since its release last year.
Recent estimates from BofA Global Research indicate that Nvidia holds approximately 75% market share in the AI semiconductor market. Furthermore, they reported that only 10% of cloud servers are currently equipped with AI-specific chips, signaling a potential shift towards AI infrastructure investments.
The investment plans announced by Microsoft and Google reinforce the notion that the industry is indeed moving towards increased investment in AI infrastructure. This shift presents a promising opportunity for Nvidia's future growth and market dominance.
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