NVIDIA Corp. (NVDA), already well outperforming the flat market this year, is set to climb even higher as popularity over its main artificial intelligence (AI) product soars. Amid a stellar earnings report last week, Needham & Co.’s Ravjindra Gill raised his price target for the technology firm, pointing out that, “every major cloud provider and server market is deploying Volta,” the brand name of NVIDIA’s data center chips that are used for things like machine learning, according to Barron’s.
The new price target set by Gill is $325, up from $300. That implies a 32% gain from Thursday’s opening price. Shares are down slightly more than 3.5% since the close of trading Monday, the day Barron’s published their article. But NVIDIA is up 1,588% over the past five years, a whopping rise compared to the S&P 500’s return of 64% over the same period.
With the market basically flat this year, the founder of TradingAnalysis.com, Todd Gordon, told CNBC on Wednesday that NVIDIA is one of the only stocks in the market worth buying right now.
Strong first-quarter earnings were driven by a 71% rise in NVIDIA’s data center chip sales. Companies like Microsoft, Amazon, IBM, Oracle and Google, are all adopting Volta for use in their public cloud platforms. Kevin Cassidy of Stifel Financial Corp. claims that the company is “changing the industry in the data center,” according to The Wall Street Journal.
Volta is NVIDIA’s newest GPU architecture that offers a 5x increase in deep machine learning performance compared to Pascal, an earlier generation of the GPU architecture. The company claims that as the “core of AI,” the Volta architecture “will fuel breakthroughs in every industry.” (See also: NVIDIA Reports Earnings Setting an All-time High.)
Significantly, shipments to the cloud of the inference component of NVIDIA’s AI GPU more than doubled in the most recent quarter. As opposed to the training component where the computer is first learning new rules, the inference component is the part that enables the computer to answer questions.
The Race for AI
As an indication of NVIDIA’s growing dominance in providing data chips to certain industries, Barclays analyst Blayne Curtis wrote in a note earlier this month that the company already has “a large moat around certain markets, like autos, and aims to create a similar ecosystem in robots.” (See also: NVIDIA to Have Lock on AI Market: Rosenblatt.)
As far as competition goes, “Nvidia is really the undisputed leader in AI chips,” wrote Tiernan Ray in a separate Barron’s article. However, Intel is a close competitor and even some of the big tech names, like Facebook and Google, may be starting to get into the AI arms race, developing their own chips and AI functions.