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NVIDIA Corporation (NVDA): Gene Munster Shares Takeaways from GPU Tech Conference

The Street's guru of the tech world Gene Munster is captivated by Nvidia's prospects despite yesterday's sell-off.


Since yesterday, NVIDIA Corporation (NASDAQ:NVDA) shares have shed 8% in value upon the reveal that its self-driving car tests across the globe are for now coming to a stop.

The news follows last week’s tragedy: a pedestrian was killed by one of Uber’s self-driving cars in Tempe, Arizona, the first fatality caused by autonomous vehicles.

Founder and CEO Jensen Huang revealed the decision to temporarily pause autonomous testing in a keynote delivered at the chip giant’s GPU Technology Conference.

Wall Street’s tech guru Gene Munster– from his research-driven, venture capital firm Loup Ventures – anticipates testing will kickstart once more within the upcoming 3 months, once Nvidia gets a hold of a diagnostic report from the accident.

The big takeaway for this technology expert? To put it bluntly, “more GPU’s save money.”

It wasn’t all bad news for Nvidia yesterday. After all, the company is showcasing 5 new products that are geared to be competitive in the fields of artificial intelligence (AI), autonomy, as well as virtual reality (VR).

The focus for Nvidia boils down to AI and deep learning, the analyst explains when assessing the company’s six new product reveals: RTX technology (AI and blockchain); DGX-2 platform (AI and blockchain); Isaac SDK (AI), where robots gain AI for perception, navigation, and manipulation; Drive Orin (autonomy); datacenter solution Drive Constellation (autonomy); and Project Wakanda (VR).

Meanwhile, Munster likewise pays attention to a broader tech sell off yesterday that he believes spurred one-third of Nvidia’s dip yesterday.

“The message from Jensen Huang was if you buy Nvidia’s GPUs, you can save money. The idea is using an Nvidia architecture requires less hardware that consumes less energy. That said, users of these systems are solving more advanced problems like AI, which will require an increase in total spending,” the research analyst highlights, continuing to be “comfortable” with his expectations for the chip giant’s revenue growth. For 2018, the analyst looks for 31% in revenue gains from Nvidia, and 21% by 2019.

By Munster’s assessment, this is a company gunning for a future in autonomy. Munster writes, “Given the Tempe accident, Jensen spent most of the self-driving segment of the keynote talking about the importance of safety, and why fully-autonomous future means safer transportation,” adding that Jensen stands by his conviction; self-driving vehicles are likely ‘the hardest computing problem that the world has ever countered.’

The future is autonomy, from where Munster eyes the scope of tech: “Autonomous simulation will play an increasingly important role in the future. Drive Constellation can run thousands of virtual worlds, each while running thousands of scenarios in order to collect more data. For example, 10,000 constellations can simulate about 3 billion miles in a year, significantly more than 5-10 millions driven each year by the current fleets of test vehicles.”

Nvidia’s company’s VR Project Wakanda “hints at the future of relationship between man and machine,” contends Munster, who sees Jensen as a man who cares about virtual reality’s connection to offering people with autonomous transportation.

TipRanks indicates that the financial-verse tilts towards the bulls when it comes to Nvidia’s market opportunity at hand. Out of 23 analysts polled in the last 3 months, 13 rate a Buy on NVDA stock, 9 maintain a Hold, while 1 issues a Sell on the stock’s prospects. Notably, the 12-month average price target of $252.50 reflects optimism is baked into these analysts’ expectations. Return potential of nearly 12% is suggested from where the stock is currently trading.