Nvidia AI Only Warming Up
As a major mover and shaker of the artificial intelligence (AI) industry, NVIDIA Corporation (NASDAQ:NVDA) has remained at the forefront of innovation and technological advancements over the last couple of years. However, per the analysis of William Stein of SunTrust, NVIDIA is only getting started and will continue to outperform expectations. As the use of AI continues to go mainstream, according to Stein, “We expect AI will transform certain industries, and highlight potential applications and implications in automotive, defense/security, and healthcare.” It must be remembered that these industries are mammoth in size and NVIDIA is well-positioned to become a long-term industry leader.
Over the past five years, the world of AI experienced its version of the big bang, which included new parallel processing, increased data storage, and enhanced algorithms. In Stein’s view NVIDIA’s past success can be attributed to its ability to enhance server acceleration and GPU, but “there are aspects of the company, specifically related to its role in AI, that are under-appreciated by the Street.”
The analyst focused in on three points that the company can leverage to rise above traditional and new competitors, including the following: “First, NVDA has a strong culture of innovation and desire to drive general purpose graphics processing unit (GP-GPU) computing adoption. Second, we believe NVDA’s software development toolkit (CUDA, cuDNN, and related tools) is more relevant for customers and more difficult for competitors to replicate than the company’s GPUs. Third, the company’s sponsorship of academic research has created an ecosystem of incumbency in Deep Learning AI projects.”
Taking into account the above factors, Stein upgrades NVDA from a Hold to a Buy rating and lifts the price target from $124 to $177, signifying a near 9% upside (To watch Stein’s track record click here).
TipRanks analytics indicate NVDA as a Buy. Out of 26 analysts polled by TipRanks in the last 3 months, 15 are bullish on Nvidia stock, 9 are neutral and 2 are bearish. The consensus target price stands at $148, revealing a roughly 10% downside from current levels.
Intel Shows Off New Technology
The release of the Intel Corporation (NASDAQ:INTC) new Purley based Intel Xeon Scalable Processors on Tuesday marked a new era for data center and network processor infrastructure. According to Navin Shenoy, executive vice president and general manager of the Intel Data Center Group, the technology is a game changer as it can “support emerging use cases like precision medicine, artificial intelligence and agile network services paving the path to 5G [….] the biggest data center advancement in a decade.” Analyst Ruben Roy of MKM could not agree more with Shenoy’s assessment.
The analyst looks at a couple of ways that the Scalable Processors rises above the competition. Pointing to the unique architecture of the technology, Roy calls attention to features such as internal mesh architecture for enhanced data sharing and increased memory access, not to mention the Advanced Vector Extensions for processing accelerations. Notably, these innovations equal an amazing 65% improvement in performance when compared to other available platforms. Such performance enhancements have led to a rich platform, including AI, networking, virtualization, high-performance computing, and storage.
Additionally, INTC’s early seeding plan has had a tremendous effect, as 500,000 units comprising 2S, 4S and 8S products have already been shipped to over 30 tier-1 customers. Roy believes that these steps “should help to smooth the transition […] [and] this dynamic could help Purley based volume to cross over 50% adoption within a few quarters from launch.”
Considering the many “moving parts within the story,” Roy is reiterating a Buy rating on INTC stock with a $42 price target, which represents a 22% increase from where the stock is currently trading. In the analyst’s view, the company should remain focused on “Improving margin structure and continued focus on increasing operational efficiencies, coupled with a renewed focus on non-PC related growth markets will ultimately yield continuing improvement in profitability metrics.” (To watch Roy’s track record click here).
TipRanks analytics indicate INTC as a Buy. Out of 24 analysts polled by TipRanks in the last 3 months, 11 are bullish on Intel stock, 9 are neutral and 4 are bearish. The consensus target price stands at $38.74, revealing a roughly 13% upside from current levels.