Nvidia's end goal is to 'create software on the fly', says Melius' Ben Reitzes

Summary

NVIDIA'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%.