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Nvidia gives developers a glimpse at upcoming AI processor next week

Nvidia Corp Chief Executive Jensen Huang talks at the COMPUTEX convention in Taipei, Taiwan May 29, 2023

SAN FRANCISCO, March 14 (mod1s) - How long can Nvidia (NVDA.O), opens new tab and its CEO, Jensen Huang, wear the crown as the IT world's main provider of artificial-intelligence chips? 

Whether it is months, years or decades, the question will be critical when Huang - who co-founded Nvidia in 1993 and has been CEO ever since - steps foot on the stage of a Silicon Valley hockey rink on Monday to announce new flagship products. 

The occasion is the company's annual developer conference, the first to be held in person since the outbreak. Nvidia anticipates 16,000 people to attend its GTC event live, about twice the amount that attended to the 2019 presentation in person.

Nvidia's market capitalization reached $2 trillion in late February, and it is now a "mere" $400 billion away from toppling Apple (AAPL.O), opens new tab as Wall Street's second-most valuable corporation, behind stock market leader Microsoft (MSFT.O), opens new tab. 

Analysts estimate Nvidia's sales to rise 81% this year to $110 billion as corporations scoop up its top-of-the-line processors by the tens of thousands to power chatbots, picture generators and other AI systems.

That is twice the sales that experts estimate from Intel (INTC.O), opens new tab, the chipmaker that led the personal computer boom. The challenge for Nvidia is whether it can turn its recent, enormous advantage in AI computing into long-term domination of a new era of computing. 

At the core of that endeavor will be Nvidia's next generation of high-end AI chip, which experts predict will be termed the B100. The processor will sit at the hub of the AI systems that Nvidia offers and will presumably start delivering later this year.

Demand for Nvidia's existing AI processors has outstripped availability, with software developers waiting months for a chance to utilize AI-optimized systems at cloud providers. 

Nvidia is unlikely to provide particular price, but the B100 is anticipated to cost more than its predecessor, which sells for upwards of $20,000. 

Nvidia's stock has soared 83% in 2024 after more than doubling last year. Even after that spectacular surge, Nvidia is selling at 34 times its forecast profits, inexpensive compared with its PE of 58 a year ago, according to LSEG data.

That fall in Nvidia's PE value is the consequence of analysts substantially raising their predictions of the chipmaker's future profitability, and if those forecasts turn out to be excessively optimistic, Nvidia's stock risks crashing back to earth. 

The shares slid 1.1% to settle at $908.88 on Wednesday. 

"The biggest concern is the numbers have just gotten so big, so quickly, you just worry they can't last," Bernstein analyst Stacy Rasgon said of Nvidia's recent financial success. "The more new products they've got coming out at higher performance and higher prices, the more runway they have." 

Nvidia will also likely provide a flood of changes to its software known as CUDA, which gives tools for developers to execute their AI applications on its processors, helping keep developers tethered to Nvidia's hardware. CUDA makes it tougher to move to components supplied by competitors like Advanced Mirco Devices (AMD.O), opens new tab and in-house processors provided by Microsoft and Alphabet's (GOOGL.O), opens new tab Google. 

Nvidia last year began providing its processors and software as a cloud service to developers, and experts are examining how the firm develops that initiative. 

"The services side is really a software play," said Ryan Shrout of chip research company Shrout Research. He added analysts would keenly examine if cloud and software companies are "possibly getting nervous about Nvidia playing in their playground." 


Another crucial concern is whether Santa Clara, California-based Nvidia will build a definite technical lead over Chinese competitors. Washington has blocked off China's access to Nvidia's most sophisticated processors, and China has reacted with chips from Huawei Technologies Co (HWT.UL) that match the performance of Nvidia's A100 chip launched in 2020. 

No Chinese business has yet claimed to equal Nvidia's current flagship H100 processor introduced in 2022, and China-watchers predict the next B100 to put China farther behind. 

"When the government developed these controls, they knew very well that companies like Nvidia would be on an almost annual basis making improvements in their silicon, their software coding and their application stack," said Jimmy Goodrich, an expert on China and semiconductors. "Over time, that gap will just become exponentially larger."


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