Analysts at the Bank of America (BoA) have reiterated their ‘Buy’ rating for NVIDIA Corporation (NASDAQ:NVDA) after the chipmaker updated its product launch pipeline.
The updated product pipeline shows an accelerated pace of graphics processing unit (GPU) accelerator and switching product launches in the 2023, 2024 and 2025 calendar years; support for x86 and ARM-based computer processing units (CPUs); InfiniBand plus Ethernet switches; handling both generative artificial intelligence (GenAI) training and inference; and support for cloud and enterprise applications, the analysts wrote.
They believe Nvidia’s faster product launch cadence of one year versus two years could further solidify its leadership in the sector.
They noted that, while Nvidia’s roadmap does not specify manufacturing nodes, they expect the company will be a potential leader in introducing AI accelerators on advanced manufacturing nodes like 3nm and even 2nm, possibly in collaboration with Intel's foundry on its 18A process, but they expect Taiwan Semiconductor Manufacturing Company to be Nvidia's primary foundry.
“Similar to NVDA's strategy in gaming where products span the $50 to $1,500 price ranges, we believe the new data center roadmap disclosure suggests widening product breadth with an accelerated launch cadence that can continue to make it tougher for merchant competitors (AMD, INTC) to catch-up or internal cloud silicon efforts to prove themselves in the era of rapidly rising silicon cost/complexity,” they wrote in a note to clients.
“Big-picture, generative AI requires data center scale compute optimization, and NVDA's systems approach stands in contrast to the narrow silicon-only approach of its rivals.”
They added that Nvidia’s product breadth will drive share gains in the emerging GenAI inference market despite the perception that its products may be “too expensive.”
The BoA analysts also reiterated their $650 price target on Nvidia stock. Nvidia shares traded at about US$553.80 on Friday afternoon.
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