NVDIA are currently the leading producer of data center processor hardware and systems. Their big selling point is the compute requirement to power AI.
I think AI is a bit faddish. AI is a re branding of programs that have really been with us since spell check and auto correct. Not all AI is new.
However true AI is Generative AI. Generative AI uses existing referencing (like Google search) and inferenceing. Inferencing is where programs can develop conclusions and hypotheses from referenced data, test and validate outcomes and use logic steps to solve problems.
This is a great step forward in machine intelligence but successful commercial implementation may be some way off. For example vast infrastructure is required for driver less taxis. WiFi saturation of entire cities and countries via networks such as Star Link, cars that will work , be safe and be accepted by the users. This implies a time delay for development and sales of data centre equipment.
Competitors like AMD, ARM, Intel, Microsoft and Amazon may eventually diminish NVDIA's moat in this area.
Developments in this market can change quickly so keeping a watch and being agile would be helpful.
The Taiwan geographical situation is also a risk.
NVDIA has good leadership and strong fundamentals but may have to reinvent itself in the face of entrepreneurial competition.
All said I would be inclined to rate NVDA along with AMD as a short to medium term buy for now.
How well do narratives help inform your perspective?
