Nvidia has been at the forefront of the AI hardware rally for over a year, with its stock soaring more than 200% in the last 12 months alone. The company’s value is expected to peak soon, pending the release of its earnings report later this week. This report will provide insight into investor appetite for driving AI stocks like Nvidia even higher, as well as the company’s ability to meet the growing demand for its chips.
Key indicators, such as the shortage of critical components like high-bandwidth memory chips until 2025, suggest that Nvidia’s main challenge lies in meeting demand. Other signs, such as the impact on utility companies and the rising price of copper due to demand for copper cables, point to the increasing need for AI infrastructure.
Startups like CoreWeave, backed by Nvidia, further highlight the surging demand for AI hardware. As CoreWeave’s value skyrocketed from $7 billion to over $19 billion, Nvidia’s focus on prioritizing shipments of its newest chips to the startup reflects the high demand in the market.
Despite the current boom in the AI hardware sector, the market is expected to fully price in this demand by the end of the year, potentially leading to a slowdown in profit margins due to increased competition and supply limitations. This shift may pave the way for the next phase in AI development, focusing on software advancements to complement hardware innovation.
Looking ahead, the growth of AI software will rely on a solid hardware foundation, with new forms of software expected to emerge later this year. While Nvidia’s earnings report will likely highlight the continued high demand for its chips, the company may face challenges in keeping up with this demand.
In conclusion, the AI hardware sector is experiencing unprecedented demand, driven by factors such as the shortage of critical components and the expansion of utility companies into AI technologies. While the current boom is expected to taper off, the shift towards software innovation signals a new phase in AI development. As Nvidia navigates the challenges of meeting demand and balancing supply, the future of AI technology remains promising.
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https://www.brownstoneresearch.com/bleeding-edge/nvidias-peak-and-when-to-expect-the-value-sure-to-plateau/