Shares of Nvidia (NVDA) are down today after the chipmaker’s recent stock market high. Rosenblatt Securities senior analyst Hans Mosesmann joins Market Domination to explain why he’s not worried about the stock’s turbulence in recent weeks. Mosesmann set the highest price target for Nvidia on Wall Street.
Mosesmann takes a long-term view, explaining that the commercial pressure is negligible when you consider that Nvidia is going to be “the best way to play AI for the next 10 years.” He adds that Nvidia is no longer just a semiconductor company, but a platform that is “all about AI.”
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This article was written by Gabriel Roy
Video Transcript
The media’s share is declining today.
The market darling AIA I is moving further away from the record it reached not so long ago.
Our next guest, however, isn’t worried about the bumpy road we’ve seen for NVIDIA in recent weeks.
He gave the stock a buy rating, the highest price target on the market.
We want to bring in Hans and Moses, man.
He is Rosenblatt Securities, Senior Research Analyst.
It’s a pleasure to have you here.
So when you look at what has certainly been a volatile few weeks for NVIDIA, that puts a lot of pressure on the stock.
Why doesn’t this worry you?
Well, we’re entering new territory for NVIDIA.
Um, you know, the assessment really came out of nowhere over the past year.
Um, the movement has been such that it has, you know, people have kind of worked out, how is this possible and it requires that you have an understanding of what’s going on with AI and their leadership position.
So it might be a little bumpy, but from a lay perspective, for the next 10 years, this is going to be the way to play AI. They’re on another level and I think people have to get used to it and they’re not a semiconductor company anymore.
It’s a platform, it’s all AI things and Hans, you know, I guess if you’re bullish on NVIDIA two Hans, you also have to be bullish on the bigger AI megatrend, which you have to think about, you know, and yeah, it’s this paradigm shift.
And yes, Jensen Wong is right when he talks about how the next industrial revolution began, Hans.
Yes, it’s true.
So there are some moving parts and the cloud, where most of Nvidia’s business is, is not going to be the home of everything AI because over time, more and more AI is being done, not up there in the cloud, but somewhere in the middle, at the extreme, and that opens the door to more efficient solutions in terms of platform, hardware and even software.
So there are other players that will benefit from this transition, like A and D, like Arm, a little company called Lady that we cover.
Um, there are other participants, but in terms of capturing value from AI, NVIDIA may lose market share, but they may actually gain value because they monetize the entire stack, meaning the entire rack, all of the software around it.
So that’s a great model that I think people haven’t fully grasped yet, like what you just said a minute ago: NVIDIA is not just a chip maker anymore.
These are all issues related to AI that have really caught the attention of regulators around the world.
And earlier this week, we received a report from Reuters that France is considering facing antitrust charges in France.
I’m curious how you assess this risk from an analyst perspective and to what extent this could ultimately be a concerning headwind for the stock.
Yeah, I think NVIDIA’s competitors, NVIDIA watchers and countries are concerned about a company that captures or seizes all of this value.
So in some cases there is an instinctive reaction to put an end to what they have already suffered.
The US, with these restrictions on China, represents 20 to 25% of the turnover and they are still largely exhausted.
So it’s something to watch out for, but they’re not predatory.
And at least, even though prices have gone up, it’s not the price of the chip or the rack card that drives this business.
It is the value created by the total cost of ownership.
This is a different metric that we in the semiconductor industry are not used to.
RIGHT.
You can double the price of this product and it delivers significant TCO, you know, performance per watt per cubic foot per dollar, benefits that no one can match.
RIGHT.
It’s not like there’s another guy who can do it, maybe a DM could capture a part here, but it’s a little different.
But yes, it’s something to watch in France, it’s something that raises a few eyebrows and all that.
But at the moment I don’t think it will lead to anything, because they are fair in the way they price their products.
In my opinion, Hans, as you know, you know, Jensen has built this platform as he grows Hans, you know, he moves into new areas, new verticals, are there any companies that you think should be concerned.
Well, the traditional way of doing things in silicon or in metal is changing, so the general purpose server market is really being destroyed in terms of value by moving to an accelerated cycle.
So, you know, guys like Intel and even A and D, if A and D didn’t have U GPUs, for example, they would be in big trouble.
Um, so they’re changing the way the calculation is done.
And so the next wave of value that NVIDIA captures, if you look at the cloud for example, is in the networking and storage areas.
And so you start to integrate those areas in terms of value and you maximize the interface between networking and storage with the computer, the accelerated computing.
So I think the traditional networking and storage players will probably have to deal with that.
There are ways around this, for example Broadcom and Marvel, which are big network players, have the ability to make custom chips.
And so some hyperscalers don’t want to use NVIDIA all the time, they want to build their own custom accelerators, very efficient and very expensive.
And so there’s another kind of theme that goes against that, but it’s interesting how if you look at Nvidia’s roadmap, how they’re hoping to capture not just the GP U compute, but the entire rack and everything that’s going on inside the rack and, and a data center Hans, there’s been more and more talk about some of the competitors in this space, even when you look at Mikron, that’s certainly created a lot of tension here.
I’m curious what your thoughts are on this comparison and specifically some of this price action that we’ve seen on Mikron since its earnings report, what’s missing from the Street that you see given your bullish thesis on this?
So my top two picks for this year are the ones that underperformed a little bit here, lagged a little bit, uh A and D and micro.
Miron is therefore a facilitator.
Um, it’s not a competitor, it’s NVIDIA.
So they provide very useful and fundamental micro memory, whether it’s DDR 5, which is more standardized, or this new high bandwidth memory that the industry is currently limited in, probably out of stock within a year, maybe a year and a half.
So NVIDIA needs Mikron, Samsung and Hex to step up their production and get their eels, right?
An MD is more of a competitor that comes out of nowhere and an MD is helped by the hyperscalars and Broadcom and some of the network guys, as you can see, a battle of the titans emerges where a lot of the industry, the hyperscalar chip companies that feel threatened by NVIDIA are kind of teaming up to, to, to fight with what I would call, you know, like a Godzilla, like, like a personality here.
Um, when NVIDIA, you know, the green one, the green monster, if you will.
So that’s pretty much how it goes.
This will be a battle that will last a very, very long time.
But I think NVIDIA has the advantage here.
Over time, you can think of it as you know, an Apple with the iPhone and this ecosystem fighting with Android, they kind of coexist.
Um, but that’s how I, I think it might go, Hans.
It’s a pleasure to have you on the show today.
Thank you for taking the time to help us.
You got it.
