By Nvidia Corp.’s revenue has seen an impressive double in growth, but this hasn’t stopped conspiracy theories from surfacing. The main concern revolves around the company using its Nvidia graphics processing chips as collateral for substantial loans. Naturally, investors and analysts are questioning the legitimacy behind these claims.
On Wednesday, Nvidia experienced a 3.1% drop in shares, closing at $470.61. In light of this, Bernstein analyst Stacy Rasgon addressed the concerns raised by clients regarding the recent conspiracy theories surrounding the company’s significant 222% year-to-date stock gain.
In a note aptly titled “Please Don’t Get Your Investment Thesis from Twitter Randos,” Rasgon dismisses the theories as “puerile.” Despite discrediting these claims, he acknowledges clients’ worries and decides to address them further in his note.
With an outperform rating on Nvidia’s stock and a $675 price target, Rasgon expresses confidence in the company’s prospects. According to FactSet, out of the 51 analysts covering Nvidia, 47 have buy ratings and four have hold ratings. The average target price stands at $649.22.
Rasgon immediately debunks the first theory that insinuates something is amiss as Nvidia’s revenue surged while the cost of goods sold only increased by 7%. He states that this reasoning is “nonsense” and clarifies that Nvidia faced charges amounting to $1.34 billion, including inventory reserves of about $1.22 billion. These charges were incurred during the previous year when Nvidia seemingly encountered difficulties.
Digging deeper into the numbers, Rasgon explains that excluding these charges, the cost of goods sold actually rose by approximately 70% in the second quarter compared to the previous year. Considering the exceptional growth in data-center sales during this period, he deems this increase to be “entirely normal.”
Despite the skepticism surrounding Nvidia, the company’s strong financial performance remains intact. It is evident that the conspiracy theories lack substantial validity and are merely attempts to destabilize investor confidence. As Rasgon dismisses these claims, investors can continue to focus on Nvidia’s promising future.
Intel Gets Surprise Data-Center Tailwind as it Looks Toward ‘Meaningful’ AI Growth Next Year
The recent financing of $2.3 billion in debt, led by Blackstone Inc. and Magnetar Capital, by GPU cloud vendor Coreweave Inc. has raised some eyebrows in the tech industry. Coreweave listed its Nvidia AI chips as collateral for the financing, which attracted attention due to Nvidia’s investment in the company.
There have been speculations and rumors suggesting that Nvidia used this arrangement to inflate their data-center performance in the quarter and accused them of other ulterior motives tied to their investment in Coreweave. However, according to analyst Rasgon, this is all baseless. Rasgon clarified that Nvidia did not rely on Coreweave or anyone else to boost their quarterly results, as their products are in high demand and limited supply. Additionally, he pointed out that the debt facility was announced after the completion of the quarter, indicating that any deployment is likely to happen in the future.
Nvidia’s investment in Coreweave, as well as other AI startups like Hugging Face Inc., Activ Surgical Inc., AI21 Labs Ltd., Skydio Inc., and Superluminal Medicines Inc., is part of their strategy to support the growth of businesses built on Nvidia GPUs. By fostering these partnerships, Nvidia aims to counter the threat posed by cloud service providers developing their own internal AI offerings.
Intel, on the other hand, is looking forward to significant AI growth in the coming year. The unexpected boost from the data-center sector, along with their ongoing efforts in AI development, sets Intel on a promising path for the future.
AMD CEO Lisa Su Optimistic About Sales Due to New AI Chip
In related news, Lisa Su, CEO of AMD, expressed her satisfaction with the increasing interest in their new AI chip, which is translating into sales. Su believes that the demand for advanced AI technology will continue to grow, and AMD is well-positioned to meet this demand.
Arm IPO: 5 Things to Know About the Chip Designer Central to the AI Transition
Another major player in the AI industry is Arm, the chip designer company that has become central to the AI transition. As their IPO approaches, there are several key factors to consider when evaluating Arm’s importance and potential impact on the AI landscape.
These developments signify the dynamic nature of the AI industry, with companies like Intel, Nvidia, AMD, and Arm constantly innovating and adapting to the evolving needs of the market. The future of AI holds exciting possibilities, and these tech giants are at the forefront of driving its growth.
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