Nvidia's end goal is to 'create software on the fly', says Melius' Ben Reitzes
Summary
TLDRNVIDIA's stock has faced a 4% decline, yet the company is poised for growth as it transitions towards software, aiming to create AI factories that produce software applications on the fly. Ben Ritsus, Head of Technology Research, raises his price target for NVIDIA for the fifth time this year, from $125 to $160, and highlights the potential for NVIDIA to generate over $270 billion in cash in the next three years. This cash could be returned to shareholders, maintaining a high market multiple. The discussion also touches on the impact of NVIDIA's strategy on other software companies and the potential for new mega caps in the AI revolution.
Takeaways
- 📉 Nvidia's shares are under pressure, ending the week lower by 4%.
- 📈 A guest has raised the price target on Nvidia's stock for the fifth time this year, from $125 to $160.
- 🧑💼 Ben Ritsus, Head of Technology Research, is optimistic about Nvidia's potential despite the current market situation.
- 🔧 Nvidia is compared to past industry leaders like Microsoft and Apple, suggesting a significant transition is necessary for continued growth.
- 🤖 The company is praised for being close to 'nailing AI' by creating an ecosystem that developers love and rely on.
- 🔄 Nvidia is undergoing a paradigm shift, positioning itself as a combined force of past tech giants like Microsoft and Apple.
- 💼 There is an expectation that Nvidia will transition more towards software, which is a significant part of their future strategy.
- 💰 The company could generate over $270 billion in cash over the next three years, which could be beneficial for shareholders and maintain a high market multiple.
- 🌐 The discussion highlights the potential for Nvidia to create 'AI factories,' essentially software factories that produce applications on the fly.
- 🚀 If successful, Nvidia's end goal of creating software dynamically could open up a trillion-dollar market opportunity.
- 🏁 Broadcom and AMD are mentioned as competitors in the tech industry, with Broadcom in a good position due to custom silicon CapEx.
- 📉 The script also touches on the challenges faced by traditional software companies that may be disrupted by Nvidia's on-the-fly software creation.
Q & A
Why are shares of NVIDIA under pressure?
-The script does not specify the exact reasons for NVIDIA's shares being under pressure, but it mentions that the stock ended the week lower by 4%.
Outlines
📉 NVIDIA's Stock Pressure & Future Growth
The video script discusses the current pressure on NVIDIA's stock, which has fallen by 4%, despite an optimistic price target increase by a guest from $125 to $160. Ben Ritsus, the Head of Technology Research, is introduced and discusses the potential transition NVIDIA must undertake to grow its market cap from $3 trillion to $4 trillion. He emphasizes NVIDIA's position as a leader in AI by creating a developer-friendly ecosystem and hints at a paradigm shift similar to past industry leaders like Microsoft and Apple. Ritsus suggests that NVIDIA's future lies in transitioning more towards software and highlights the potential for generating over $270 billion in cash over the next three years, which could benefit shareholders and maintain a high market multiple.
🚀 NVIDIA's AI Potential and Market Impact
This paragraph delves into NVIDIA's role in the AI revolution, comparing it to the impact of mobile and cloud revolutions on companies like Apple, Google, Amazon, and Microsoft. The speaker speculates on the number of mega-cap companies that might emerge from the AI revolution and highlights NVIDIA's innovative approach to creating 'AI factories,' essentially software factories that produce applications and software on demand. The potential for NVIDIA to create software dynamically is seen as a significant value driver, with the possibility of capturing a much larger market share than currently estimated. The conversation also touches on other companies like Broadcom and AMD, which could be potential competitors in this space.
💼 Impact on Software Companies and NVIDIA's Strategy
The final paragraph of the script considers the implications of NVIDIA's strategy on existing software companies. It humorously notes that some software companies may no longer be in communication with the speaker, suggesting a competitive threat. The speaker reflects on the success of software companies in the cloud era and their transition to SaaS, but also acknowledges that they cannot indefinitely raise prices, especially in the face of AI advancements. The discussion points out that while companies like Microsoft, Salesforce, and Adobe are strong, the AI revolution could enable new startups and create new competitors, making it challenging to predict clear winners in the software industry.
Mindmap
Keywords
💡NVIDIA
💡Price Target
💡Market Cap
💡AI (Artificial Intelligence)
💡Ecosystem
💡Paradigm Shift
💡Software Transition
💡Cash Generation
💡Mega Caps
💡AI Factories
💡SaaS (Software as a Service)
Highlights
NVIDIA shares under pressure, ending the week lower by 4%.
Guest raised his price target on NVIDIA stock for the fifth time this year, from $125 to $160.
NVIDIA is closest to 'nailing' AI by creating an ecosystem that developers love and rely on to grow.
We are in a paradigm shift, with NVIDIA combining the strengths of past regime leaders Microsoft and Apple.
NVIDIA may have the best run rate of all the big companies.
NVIDIA needs to transition more to software, which is expected to happen.
NVIDIA could generate over $270 billion in cash over the next three years, a figure not widely discussed.
The massive cash pile NVIDIA could generate can benefit shareholders and maintain a high market multiple.
Only two companies became mega caps out of the mobile revolution (Apple and Google) and two out of the cloud revolution (Amazon and Microsoft).
NVIDIA is creating 'AI factories' which are essentially software factories, producing applications and software on the fly.
If NVIDIA succeeds in creating software on the fly, there is a potential trillion-dollar total addressable market for them.
Broadcom is in a good position with custom silicon CapEx, and AMD is considered a dark horse in the industry.
Dell has been pushed hard as a software company that could be impacted by NVIDIA's on-the-fly software creation.
Software companies that have been raising prices may face challenges as AI allows more startups to enter the market.
Companies like Salesforce and Adobe are good, but the AI revolution makes it difficult to pick clear winners among software companies.
Transcripts
SHARES OF NVIDIA UNDER PRESSURE
AGAIN TODAY, ENDING THE WEEK
LOWER BY 4%.
OUR NEXT GUEST JUST RAISED HIS
PRICE TARGET ON THE STOCK FOR
THE FIFTH TIME THIS YEAR, THIS
TIME FROM 125 TO 160.
LET'S BRING IN HEAD OF
TECHNOLOGY RESEARCH BEN RITSUS.
HAPPY FRIDAY.
THE OTHER TWO $3 TRILLION STOCKS
IN THE MARKET RIGHT NOW HAD TO
GO THROUGH THESE TRANSITION
PERIODS, MOST RECENTLY FOR
APPLE, FROM iPOD TO iPHONE, FROM
MICROSOFT FROM WINDOWS TO BEING
A PRODUCTIVITY COMPANY OVERALL.
WHAT'S THE TRANSITION THAT YOU
THINK NVIDIA HAS TO AND CAN MAKE
TO MAINTAIN AND GROW THIS $3
TRILLION MARKET CAP TO FOUR?
>> WELL, I THINK THAT THEY'VE --
THEY'RE THE CLOSEST THING TO
NAILING AN AI SO FAR OBVIOUSLY
BY CREATING AN ECOSYSTEM THAT
DEVELOPERS LOVE, AND THEY KNOW
THEY CAN BE RELIED UPON TO GROW.
AND THAT'S A REALLY BIG THING.
WE ARE IN A PARADIGM SHIFT.
AND THIS IS THE MICROSOFT AND
APPLE OF THOSE PAST REGIMES ALL
COMBINED INTO ONE IN NVIDIA.
AND THAT'S WHAT YOU HAVE TO
THINK ABOUT AND REALLY STARTING.
SO THEY MAY HAVE THE BEST RUN
RATE OF ALL THE BIG ONES.
WHAT THEY NEED DO IS TRANSITION
MORE TO SOFTWARE WHICH WE'RE
GOING TO SEE.
AND ALSO I THINK WHAT'S REALLY
COOL AND WE WROTE ABOUT THIS
TODAY IS THEY COULD GENERATE
OVER $270 BILLION IN CASH OVER
THE NEXT THREE YEARS.
AND NOBODY TALKS ABOUT THAT.
THAT'S SOMETHING THAT CAN COME
BACK TO SHAREHOLDERS AND REALLY
KEEP THE MULTIPLE PRETTY HIGH
FOR A LONG TIME.
SO WE -- WE LIKE WHAT WE'RE
SEEING, BUT EVENTUALLY PEOPLE
ARE GOING TO BE TALKING ABOUT
THIS MASSIVE CASH PILE.
>> ARGUABLY THEN ONLY TWO
COMPANIES BECAME MEGA CAPS OUT
OF THE MOBILE REVOLUTION, RIGHT?
APPLE AND GOOGLE.
AND THEN ONLY TWO BECAME MEGA
CAPS OUT OF THE CLOUD
REVOLUTION, AMAZON AND
MICROSOFT.
HOW MANY MEGA CAPS ARE WE GOING
TO GET OR MAINTAIN OUT OF THE AI
REVOLUTION?
>> WELL, WE'RE NOT SURE -- I
MEAN RIGHT NOW, WE STILL THINK
-- OBVIOUSLY SOFTWARE HAS HAD A
FEW GOOD DAYS, BUT NVIDIA IS
DOING SOMETHING AMAZING HERE.
THEY ARE CREATING AI FACTORIES
WHICH IS REALLY CODE FOR
SOFTWARE FACTORIES.
AND THEIR OUTPUT IS SOFTWARE.
IT'S APPLICATIONS, STUFF THAT WE
TAKE FOR GRANTED TODAY IN A
DIFFERENT FORM.
AND NVIDIA'S END GOAL IS TO
CREATE SOFTWARE ON THE FLY.
THAT'S THEIR PRODUCT THAT
THEY'RE GOING TO CREATE WITH
THESE AI FACTORIES.
AND THAT'S JUST A TON OF VALUE,
JON.
IF THEY GET THIS RIGHT, THERE
ARE TRILLIONS OF TAM THAT SHOULD
GO TO THEM, NOT JUST THE
TRILLION THAT JENSEN TALKS
ABOUT.
IF YOU'RE CREATING SOFTWARE ON
THE FLY EVENTUALLY THAT'S VERY
VALUABLE.
OBVIOUSLY NVIDIA, WE'VE BEEN
TALKING A LOT ABOUT
BROADCOMLATELY, YOU PROBABLY --
BROADCOM LATELY, YOU PROBABLY
SAW THAT.
BROADCOM'S IN A GOOD SPOT WITH
THE CapEx FOR THE CUSTOM
SILICON.
YOU KNOW, THEY'RE PROBABLY THE
CLOSEST ONE IN TERMS OF THINKING
ABOUT WHO CAN BE NEXT AND THEN
AMD'S THE DARK HORSE HERE.
>> OKAY.
>> ON THE SIDE WE'VE BEEN
PUSHING DELL REALLY HARD.
YOU KNOW THAT.
>> YEAH.
WHAT KIND OF SOFTWARE COMPANIES
GET DESTROYED WHEN YOU'RE
CREATING SOFTWARE ON THE FLY
LIKE THAT?
>> WELL, THE KIND THAT DON'T
TALK TO ME ANYMORE.
SO YOU KNOW, THAT'S REALLY A
JOKE THAT SOME OF MY CLIENTS
WILL LIKE.
BUT YOU KNOW, I THINK THAT THE
SOFTWARE COMPANIES HAD IT REALLY
GOOD FOR MANY YEARS.
THEY NAILED IT, AND THEY WERE
THE BIG BENEFICIARIES OF THE
CLOUD.
AND THEN THEY TRANSITIONED TO
SAS.
AND SORT OF RIGHT NOW ARE IN THE
EARLY INNINGS OF SEEING THEY
JUST CAN'T, YOU KNOW, PRICE
FOREVER.
THEY'VE BEEN RAISING PRICES ON
EVERYBODY SINCE COVID AND
BEYOND.
NOW THEY WANT TO CHARGE EXTRA
FOR AI.
LET'S SEE HOW THAT GOES FOR
THESE GUYS.
YOU KNOW, OTHER THAN MICROSOFT,
IT'S REALLY HARD TO PICK A
WINNER.
OF COURSE YOU COULD HAVE SOME
TRADING DAYS.
YOU KNOW, SALESFORCE A GOOD
COMPANY.
ADOBE A GOOD COMPANY.
WE THINK IT'S PRETTY TOUGH -- AI
ALLOWS A LOT OF STARTUPS TO GET
GOING THAT MAYBE WOULDN'T HAVE
OTHERWISE.
AND THEN A LOT OF COMPETITORS
GET STOOD UP.
IN GENERAL, WH
Weitere ähnliche Videos ansehen
Nvidia Stock Has Soared 24,000% in 10 Years | NVDA Stock Analysis
Why Microsoft has a 'meaningful ways to run,' analyst discusses
Nvidia 财报分析! 下一个增长点在哪? 风险在增加?【美股分析】
NVDA | This Is Where I’m Buying!
Why Dan Ives Says It’s Still the First Inning for Nvidia
Nvidia Stock Investors Just Got AMAZING News From This Analysts -- NVDA Stock
5.0 / 5 (0 votes)