Nvidia Faces Challenges in Cloud Computing Market
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1 hour ago
0mins
Should l Buy NVDA?
Source: Fool
- Market Share Pressure: Amazon plans to invest approximately $200 billion in data center construction in 2023, a significant increase from $131.8 billion last year, with a large portion allocated for Nvidia's latest GPUs; however, Amazon's push for its own Trainium chips could undermine Nvidia's long-term market dominance.
- Major Order Agreement: Amazon and Nvidia have agreed on a deal for the delivery of 1 million Nvidia GPUs by the end of 2027, which is expected to generate tens of billions in revenue for Nvidia over the next two years, yet Amazon's increasing investment in its own AI accelerators poses a risk to Nvidia's future earnings.
- Intensifying Competition: Demand for Amazon's Trainium chips has surged, with a current backlog of $225 billion for Trainium compute, while AWS's total backlog stands at $364 billion, indicating a gradual reduction in reliance on Nvidia GPUs, which may lead to uncertainty in Nvidia's future revenue growth.
- Cloud Service Transformation: Amazon's Bedrock service is making it easier for developers to utilize non-Nvidia AI accelerators, with an increasing number of customers opting for Trainium over Nvidia GPUs, which not only reduces Amazon's capital expenditures but also potentially attracts more customers to its platform, intensifying competitive pressure on Nvidia.
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Analyst Views on NVDA
Wall Street analysts forecast NVDA stock price to rise
41 Analyst Rating
39 Buy
1 Hold
1 Sell
Strong Buy
Current: 211.500
Low
200.00
Averages
264.97
High
352.00
Current: 211.500
Low
200.00
Averages
264.97
High
352.00
About NVDA
NVIDIA Corporation is an artificial intelligence (AI) infrastructure company. The Company is engaged in accelerated computing to help solve the challenging computational problems. Its segments include Compute & Networking and Graphics. The Compute & Networking segment includes its Data Center accelerated computing and networking platforms and AI solutions and software, and automotive platforms and autonomous and electric vehicle solutions, including software. The Graphics segment includes GeForce GPUs for gaming and personal computers (PCs), and Quadro/NVIDIA RTX GPUs for enterprise workstation graphics. Its technology stack includes the foundational NVIDIA CUDA development platform that runs on all NVIDIA GPUs, as well as hundreds of domain-specific software libraries, frameworks, algorithms, software development kits (SDKs), and application programming interfaces (APIs). Its platforms address four markets, which include Data Center, Gaming, Professional Visualization, and Automotive.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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