Source : THE AGE NEWS
It was in the unusual setting of “Sin City” – Las Vegas – that the man dubbed the godfather of artificial intelligence, Nvidia’s Jensen Huang, this week unveiled his vision for the next-generation use of the technology that ushers in what has been described as the next industrial revolution.
But as people hung on every word of the presentation from the company that has captured the imagination of investors and anthropologists around the world, and while analysts swooned at Huang’s vision to enable the next phase of colonisation of AI into business, the company’s share price fell.
Jensen Huang, Nvidia’s co-founder and chief executive.Credit: Bloomberg
As it happens, even the positive hype from Nvidia’s new frontier prospects couldn’t offset the troublesome US economic data that cast a shadow over the prospects for lower inflation and created uncertainty over the timing of interest rate cuts.
There was already an undercurrent of concern about the outlook for inflation under a Trump administration, so news that services inflation was stronger than expected only heightened fears that this would put the sharemarket under pressure.
Tech stocks bore the brunt of this concern – including the sector’s poster child, Nvidia.
Despite fears about the broader equities landscape, the address from Huang ticked every box for his legion of disciple-like followers. Those who invested five years ago have made more than 2000 per cent on the stock, while even the later converts who bought shares two years ago have had their stock rise by 700 per cent.
It is this meteoric rise in earnings and value that has catapulted the company from near obscurity to the second-largest company in the world in little more than five years.
But replicating these kinds of growth rates for a company now this size becomes arithmetically near impossible.
The nub of the message from Nvidia was that it is not about to stand still nor rest on the inroads it has made in the chip-enabled AI space. Rather, Huang’s address on Monday outlined a slew of new AI technology particularly around robotics, autonomous technology and personal computers that tech investment expert Dan Ives from Wedbush says will stretch the enormous technology lead that Nvidia has over the semiconductor industry and other big IT companies.
The viral-like spread of AI that Jensen sees in his vision for the company presages the creation of a billion humanoid robots, 1.5 billion self-driving automobiles and 10 million fully automated factories.
Huang in Las Vegas on Monday. Some analysts liken him to a rock star in the business world.Credit: Bloomberg
Huang described this sci-fi-sounding scenario as a multitrillion-dollar opportunity.
His speech also unveiled a laundry list of additional or beefed-up deals with corporate partners, including naming data storage firm Micron as Nvidia’s memory partner for its gaming graphics processing unit, and three autonomous driving deals.
Nvidia will supply the semiconductor chips for Toyota’s driver assistance programs, and will deliver the technology powering the self-driving trucks of Colorado-based Aurora. Meanwhile, Uber said it would use Nvidia’s Cosmos physical AI platform to power its autonomous driving ambitions.
Huang’s address clearly hit a positive chord with analysts who turned up en masse to the Vegas event.
Goldman Sachs was reported saying that the string of announcements, at a minimum, highlighted Nvidia’s ability to innovate at industry-leading speed across hardware and software, as well as its robust partner and customer ecosystem.
Or as Ives from Wedbush put it: “We believe the robotics and autonomous technology market alone represents another $1 trillion of incremental market opportunity that Nvidia now can tap into over the coming years, which speaks to our view this company will exceed $US4 trillion market cap and ultimately could be a $US5 trillion market cap valuation as we head into the next 12 to 18 months.”
To reach $US4 trillion in a year would represent a share price gain of just over 15 per cent, and a 45 per cent gain would be needed to achieve a market capitalisation of $US5 billion.
These would not replicate the percentage price gains in previous years, but in absolute terms would be enormous.
It is not surprising that Ives likened Huang’s address at the Las Vegas CES to a rock concert rather than a chief executive address – he’s become the Taylor Swift of the business world. Move aside, Swifties, and usher in the Jensens.
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