Nvidia has 3-5 years of AI dominance, analyst says

so let's keep on with it here with Nvidia this morning as the company has tripled in value in about a year is this growth sustainable as investors continue to reward the AI hype here with more we've got Doug Clinton Deepwater Asset Management managing partner here all right so let's start there is it sustainable I think it is sustainable and you know it always sounds smart to ask the question you know when will this be over you look at the hockey stick that you just described Brad it feels a little scary it looks a little scary on the chart but I think the reality is this we are in inning three or four of this AI bull market I think that we are still early as uncomfortable as that sounds and maybe feels but I think it's going to feel uncomfortable all the way until we get to eventually being in a true AI bubble which we think is kind of the culmination of this bull market and then people will stop talking about valuation altogether so that that's the odd sort of counterintuitive reality is we're worried right now that things might be over it's probably not over when we stop worrying that's when you should start worrying and also dou just taking a step back we also have this stock split that's going to take place or be effective um after the end of the trading day tomorrow I guess we just talk about some of that near-term excitement that buildup that we've seen within AI how big of a driver do you see that it's probably just going to be a very brief blip or move bump to the upside but how big of a driver do you see that in terms of just the narrative and excitement surrounding AI I think the stock split for in video as you said Sean I think that will just be kind of a blip here obviously that gets certain people excited mentally you see a lower stock price and people feel like it may be cheaper even though it's not I think the reality though with Nvidia is they continue to show business momentum I think that's really what is the most exciting piece of the entire story is that despite all of us worrying that eventually this demand for chips will slow down we haven't really seen that slow down happen yet and it may take longer to slow down than we think that's kind of the the new opinion that I think the street might think about and so as we're thinking about what the street is going to continue to rally on the backup here I mean we just laid out the entirety of the companies that are really within this $3 trillion conversation and for NVIDIA it's really been the artificial intelligence demand that they continue to site and how people are essentially looking at them as this de facto AI play what about the market share that they need to retain in order to continue to maintain this type of sentiment in the street I think that's the right question going forward I mean right now from a market share perspective they likely have 80 to 90% of accelerated compute market share market share for chips that do power this AI Revolution and I think going forward they probably need to maintain share in that realm so the question really is number one can AI companies companies that are building these models like Google like open AI with their partnership with Microsoft can they eventually generate Revenue that makes this investment Justified that's an outstanding question I think they will it may take longer than investors hope but I think they will the second question to your point is can Nvidia maintain its dominant position providing the brains to these artificial intelligence models and I think they can for the next three to 5 years I do think that we should pay attention to all of the hyperscalers building their own s there is going to be competition out there but I still think at least for the next three years Nvidia is going to be the go-to company I was just out at uh Bank of America's Global Tech conference uh earlier this week in San Francisco and I was talking to some Executives the nck as CEO reie ramaswami was one of them we ALS I was also speaking with the founder of Pure Storage and they've raised that issue that you were just bringing up right just in terms of how realistic maybe these timelines are until we see some real return when it comes to some of those secondary players I'm curious of you think that the market almost needs a reality check at this point and maybe the excitement in some of these plays maybe not Nvidia and certainly doesn't seem like Nvidia but when we talk about some of those secondary plays has it gotten a little ahead of itself at this point I think it depends on your timeline and I when you look at sort of these technologically driven booms they're never purely up and to the right when you zoom out they always look like they are but when you live through it day to day and week to week there are pullbacks I mean even in viia had a 20% pullback earlier this year that's painful if you bought the stock at the top and so I wouldn't be surprised if we do see some of those right sizings temporary right sizings you know in the next 3 six months as investors do think about how do revenues ultimately translate and I think the story with emerging technology is often the same which is it usually does take a little bit longer than everybody hopes to generate meaningful Revenue but once that Revenue comes it's often bigger than people even imagine I think that's probably going to be the case for AI too just why we have you here Nvidia CEO Jensen Wong talked about demand for the company's chips in an exclusive interview with yo Finance this came after the company's first quarter results last month want to play for you a clip of what he had to say copper demand grew throughout this quarter after we announced Blackwell and so that kind of tells you how much demand there is out there people want to deploy these data centers right now they want to put our gpus to work right now and start making money and start saving money and so so that that demand is just so strong do you have an assessment of Within These data centers the makeup or the total number of chips that we could even potentially see some of these data centers grow out to as we're looking for even more demand that is going to be needed well not needed but even more that is going to be asked of the chips within the data centers because of gener of AI it's a big number and the reality is you can you can look at several data points I mean xai for example a company that deep water actually just invested in recently Elon Musk has talked about needing a 100,000 of nvidia's topend AI accelerator chips uh to build the supercomputer that they want to build that's three to four billion dollars of capex there from a single customer and obviously that's just one data center that's one supercomputer they will continue to build more infrastructure over time um and I think you can look at the same thing for many of the other hyperscalers we're talking about hundreds of thousands of chips that are needed there and maybe even if you expand out you look at Sovereign Nations that are looking at AI you look at industry that are thinking about how to apply AI the demand for the chips could scale into the Millions

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Id: rQXjNPAZ9aE

Length: 6min 49sec (409 seconds)

Published: Thu Jun 06 2024