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Tuesday, March 5, 2024

Why Nvidia, AMD, and Intel will be hot stock stories in 2024

Why Nvidia, AMD, and Intel will be hot stock stories in 2024

Here are the takeaways from today’s Morning Brief, which you can register to receive every morning in your mailbox accompanied by:

I have to make a confession before the New Year.

Nine years ago, I had never heard of Nvidia before. I’m not proud of it because I like to eat, sleep and breathe investing. The company just wasn’t on my radar screen, what can I say.

It wasn’t until my former boss, Jim Cramer, began discussing the company’s chip advancements daily at TheStreet headquarters that I became interested in the company, in part to keep have an intelligent conversation with the Big Guy and write him stories. Jim was so far ahead of the Nvidia story, quite a phone call.

Since then, Nvidia (NVDA) has truly captured the minds of investors – and business leaders who are tapping the company to support their AI expansion. This year alone, Nvidia’s market cap surpassed $1 trillion for the first time (it now stands at $1.2 trillion, according to Yahoo Finance). data).

Wall Street analysts on average forecast Nvidia’s profits will increase by almost 70% over the next year (they will likely be much higher). And Nvidia is 12 months late price/earnings ratio of 64 is almost triple that of the S&P 500.

It can’t make its H100 AI chips fast enough and they remain rare.

Companies like CoreWeave increase the debt backed by the Nvidia chips they own (kinda crazy when you think about how fast technology is evolving, risking asset devaluation). Nvidia founder Jensen Huang, who built the company from in a Denny’s in 1993 – has created a large number of millionaires within his company and is would have warning them not to become fat and lazy.

From the outside, everything seems to be going Nvidia’s way over the past decade. I’m sure there were challenges for management and lower level employees, but the company continued to present victory after victory to the investor board.

I’m not here to say that Nvidia’s winning ways won’t continue in 2024. The company’s mega wins have propelled it well ahead of its competitors in chip development. But what I’m saying today is that the competitive gap with two big, hungry rivals is closing.

Nvidia bulls would be well advised to undertake a competitive analysis on AMD (AMD) and Intel (INTC).

AMD unveiled its most advanced chip for generative AI several weeks ago.

Coined the MI300x, it can use up to 192 GB of memory and has an incredible 153 billion transistors. AMD CEO Lisa Su highlighted the chip’s better performance potential compared to “competitors” – a not-so-thinly-veiled reference to Nvidia.

The massive memory capabilities mean AMD’s new chip could be used to train large language models, such as OpenAI’s ChatGPT, commonly known as “LLMs.”

Su told me it has a “line of sight” on a turnover of 2 billion dollars just with this chip in 2024.

In the meantime, Intel has begun to come back to life under the leadership of CEO Pat Gelsinger. after a difficult year 2022 and first half of this year.

A week ago, Intel present a range of products and services all including artificial intelligence. Gaudi3, an artificial intelligence chip for generative AI software, was on display. The chip will be officially launched next year.

The Street gave the new chips solid marks.

Gelsinger told me he’s ramping up production of these new chips “crazily” (see video above) to become the dominant player in the burgeoning AI PC market.

This three-way AI chip battle will be one to watch in 2024…with perhaps major implications for the stock performance of individual companies and the broader AI complex. Don’t neglect the challengers, Nvidia fans.

Brian Sozzi is the editor-in-chief of Yahoo Finance. Follow Sozzi on Twitter/X @BrianSozzi and on LinkedIn. Advice on deals, mergers, activist situations or anything else? Email brian.sozzi@yahoofinance.com.

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