Nvidia’s AI, Metaverse Investment Keeps Business Strong After Crypto Mining Demand Declines

Nvidia is likely to report first-quarter results on Wednesday, showing investments in artificial intelligence and Metaverse products are paying off, offsetting much of the chipmaker’s loss in semiconductor sales related to ether mining. ing.

The company is one of the best-positioned companies in the semiconductor sector this year, given its dominant position in generative AI and multiple new product cycles in the data center and gaming sectors, according to corporate and investment banking arm KeyBanc Capital Markets. It is said that it is one.Cleveland-based KeyCorp’s
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.

“We believe competitive risks are limited and expect Nvidia to continue to dominate one of the fastest growing workloads in cloud and enterprise,” KeyBanc analysts said in a note Sunday. So does Omniverse, Nvidia’s platform for building and operating 3D industrial metaverse applications. This represents a new software subscription revenue stream, and may be subject to further reassessment of multiple valuations as it grows and scales. ”

KeyBank reiterated its overweight (outperform) rating on the stock and raised its price target to $375 from $320. The stock was trading near $308 on Tuesday afternoon. .

Wedbush Securities analyst Matt Bryson has a neutral rating on the stock, with a more conservative price target of $216 to $290, but says he believes AI demand will continue to rise for at least the next 12 months. It is likely to create a strong tailwind for “There is no fundamental impediment to stock prices,” he said.

In his view, the question investors should instead focus on is what are Nvidia’s long-term opportunities in artificial intelligence, for example, what efficiency gains can be made to turn employee savings into IT spending? and how many times it is worth it.

Wall Street analysts expect NVIDIA’s first-quarter revenue to fall 22% to $6.5 billion from $8.3 billion in the same period last year, and EPS to fall 17% to 92 cents from $1.11, according to Bloomberg. are doing. Net income is expected to be $2.2 billion, down from the $2.8 billion announced last May.

The decline reflects a loss of revenue from the sale of graphics processing units, a type of semiconductor used to mine Ether.ethereum
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Most of that trend has died out as networks move to energy efficient business models. Nvidia, fully aware of the loss of cryptocurrency mining revenue, has decided to focus its technology on the currently burgeoning market of Metaverse-enabled software and artificial intelligence leveraging graphics-oriented semiconductors. .

Apparently the bet paid off. The artificial intelligence boom sparked by OpenAI’s chatbot ChatGPT has led to a surge in demand for GPUs.With the United States banning the sale of AI chips to China, major Chinese companies such as Baidu
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is buying up Nvidia’s AI GPUs, DigiTimes reports.

In March, Nvidia announced a partnership with Microsoft.
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It focuses on bringing the industrial metaverse and AI to enterprises through cloud computing platform Azure. During the announcement, Nvidia CEO Jensen Huang reiterated that his goal is to bring new AI, simulation and collaboration capabilities to every industry.