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Nvidia Shares Could See Further Gains as it Enters New Growth Period, says Goldman Sachs
Strong Growth Potential in Data Center Business
Goldman Sachs analyst Toshiya Hari has reiterated his buy rating on Nvidia and increased the price target to $495 per share. He believes that Nvidia is entering a new growth period fueled by the emergence and proliferation of Generative AI. With new AI models requiring stronger compute and training, Hari sees a significant runway for Nvidia's data center business. The company's competitive advantage in both hardware and software investments has made it a key enabler and beneficiary of traditional AI for nearly a decade.
Opportunities in Training and Inferencing
Hari predicts a three-year revenue opportunity of $13 billion from training alone, along with a bull case scenario of $316 billion. The analyst also sees lucrative revenue opportunities from inferencing, with a potential $1 billion in a bull case scenario from search and a $2.1 billion revenue opportunity from enterprise. Social media presents one of the strongest revenue opportunities, with a base case scenario calling for $1.9 billion in revenue. While the range of potential outcomes is large due to the nascent nature of Generative AI, Hari remains optimistic about Nvidia's growth prospects.
Positive Outlook for Taiwan Semiconductor Manufacturing
Goldman Sachs also increased its price objective for overseas shares of Taiwan Semiconductor Manufacturing (TSMC). Analyst Bruce Lu expects marginal revenue upside in the near term, but anticipates a meaningful uptick in the medium term as wafer demand increases and the company expands capacity. Lu believes that TSMC is well positioned to capture the AI mega trend in the coming years and remains positive about its long-term growth potential.
In conclusion, Goldman Sachs anticipates further gains for Nvidia as it enters a new growth period driven by Generative AI. The chipmaker's data center business has a significant runway for growth, supported by its competitive advantage in hardware and software investments. Additionally, Goldman Sachs has a positive outlook for Taiwan Semiconductor Manufacturing, expecting it to capitalize on the AI mega trend.
Hot Take: Implications for a New Business
The analysis from Goldman Sachs suggesting further gains for Nvidia as it enters a new growth period driven by Generative AI can have significant implications for a new business looking to capitalize on emerging technologies.
1. Identifying Opportunities: The strong growth potential in Nvidia's data center business presents an opportunity for a new business to offer specialized hardware or software solutions that cater to the increasing demand for stronger compute and training in AI models. By aligning their offerings with Nvidia's growth trajectory, a new business can position itself as a valuable partner in this expanding market.
2. Niche Markets: The revenue opportunities predicted by Goldman Sachs in training, inferencing, and social media present niche markets where a new business can carve out a unique position. Specializing in specific areas such as training data sets, inferencing algorithms, or AI-driven social media tools could allow a new business to tap into the growing ecosystem surrounding Nvidia's growth and capture a share of the market.
3. Partnering Opportunities: As Nvidia and Taiwan Semiconductor Manufacturing (TSMC) are expected to benefit from the AI mega trend, they may seek partnerships with new businesses that offer complementary technologies or services. For a new business capable of providing innovative solutions or support to these industry leaders, there may be opportunities for collaboration or strategic alliances that could further bolster growth and market presence.
In conclusion, the positive outlook for Nvidia's growth and the AI mega trend opens doors for new businesses to explore lucrative opportunities in niche markets, identify areas of specialization, and potentially form partnerships with key industry players. By embracing the emerging technologies and aligning their offerings with the anticipated demand, a new business can position itself for success in the evolving landscape of Generative AI.
Article First Published at: https://www.cnbc.com/2023/07/10/goldman-sachs-ups-nvidia-price-target-as-company-enters-new-growth-phase.html.svg)
