chip manufacturer Nvidia (NVDA) baffled Wall Street analysts this week by raising its outlook and drawing attention to artificial intelligence. NVDA stock valuations have come to the forefront over concerns about an AI bubble for investors looking to invest in AI stocks.
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In other developments, Google’s parent alphabet (GOOGL) said it is in talks with European regulators over a voluntary agreement to create AI guardrails. Also at the Google Marketing Live event, the Internet search giant unveiled details of its advertising strategy amid the rise of Open AI’s ChatGPT.
Meanwhile, cybersecurity companies Palo Alto Networks (PANW) reports higher-than-expected third-quarter profit. Executives discussed their views on how generative AI will transform cybersecurity. Here is the link to the transcript of PANW’s earnings call:
Palo Alto may be well-positioned for a cloud platform because AI models require big data to train software algorithms.
How long will Nvidia monopolize AI chips?
But it was Nvidia that stood out among the AI stocks in raising its outlook. Nvidia expects revenue of $11 billion in the July quarter as demand for generative AI in the data center business is strong, beating analysts’ expectations by nearly $4 billion. .
We have others, too. Microsoft, the largest investor in OpenAI, has a close relationship with Nvidia. The two companies are also building a new AI supercomputer.
NVDA equity analysts said of NVDA’s cloud computing arm, Amazon Web Services: Amazon.com (AMZN) appears to be a customer for the new Nvidia AI chips. AWS is intel (INTC) chip.
Nvidia Outlook Raises Intel and Advanced Micro Devices What (AMD) can do is capitalize on the boom in demand for AI chips in data centers.
Who among AI stocks could challenge NVIDIA?
In the long term, Nvidia could face even stiffer competition. Chip buyers almost always want a second source of semiconductors. They don’t want to rely on one chipmaker and give that company pricing power. Customers also want diversity in case of supply chain issues. For example, Microsoft also recently signed his AI development deal with AMD.
Meanwhile, the cloud computing giant and Facebook’s parent company meta platform (META) all develop custom AI chips for hyperscale data centers in-house. In April, Google unveiled a new AI supercomputer with custom silicon that it said was faster than Nvidia systems.
Goldman Sachs analyst Toshiya Hari says NVIDIA is currently the reigning champion of AI chips. It takes time for AI startups to scale.
“While we recognize the emergence of competition from major CSPs (cloud service providers) and other computing semiconductor suppliers, given their competitiveness and customer urgency, Nvidia remains the industry standard for the foreseeable future. We expect to maintain our position as we develop/introduce increasingly complex AI models,” he said in a note to customers.
AI Stocks: The Battle of Cybersecurity
Other software makers C3.ai (AI) reports earnings on May 31. His stock is up 152% in 2023, making him part of the AI stock buzz.
Analysts expect the artificial intelligence software maker to report a loss of 12 cents per share, compared with a loss of 22 cents in the same period last year. Analysts said sales would fall nearly 2% to $71 million.
What’s more clear is that a major battle is on the horizon between hackers and cybersecurity companies.
cyber security company Crowdstrike Holdings (CRWD) will report earnings on May 31. This is another AI stock to watch.
In other AI news, startup Anthropic announced on May 23 that it has raised $450 million in a funding round led by Spark Capital. Google, Salesforce (CRM), Sound Ventures, Zoom video communication (ZM) participated in the funding.
Follow Reinhard Klaus on Twitter @reinhardtk_tech See the latest in 5G wireless, artificial intelligence, cybersecurity and cloud computing.
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