In a recent $JPMorgan Chase(JPM)$ roadshow report, analyst Joe Moore provided an in-depth discussion on the current state of the AI market, responding to the market's concerns about whether or not the AI industry has peaked.Below is a summary of the key takeaways from the report:
State of the AI Market
Despite $NVIDIA Corp(NVDA)$ stock price volatility and $Broadcom(AVGO)$ erratic performance, demand for AI hardware (especially GPUs) remains strong and the market is still in its early stages.
While there is a focus on factors such as product cycles and cabinet shipment sizes, the reality is that these factors have not had as significant an impact on the market as expected.
Additionally, since the current visibility of AI demand is only a year old, there is still uncertainty as to whether or not there will be a slowdown in the future, but it doesn't necessarily mean that there will be.
Nvidia's Financial Performance
While $NVIDIA Corp(NVDA)$ ‘s growth percentages may be slowing, its revenues continue to exceed expectations.For example, revenues increased from $7 billion to $11 billion in one quarter, and it recently raised its guidance by another $2.5 billion.He expects Nvidia to continue to have significant revenue upgrades going forward.
Broadcom's AI and custom chip performance
When it comes to $Broadcom(AVGO)$ , its custom chip business (which relies heavily on Google) was flat and AI revenue growth slowed.Last quarter, Broadcom's AI division generated $11 billion in revenue, but growth fell short of expectations.Meanwhile, its networking revenue grew only slightly.
Custom ASICs vs. GPUs
In the AI market, GPUs are likely to outpace custom ASICs in terms of growth potential. nvidia has an 85% market share in this segment, compared to Broadcom's 8%.He expects demand for GPUs in cloud infrastructure to grow even faster.
Marvell and AMD's outlook
$Marvell Technology(MRVL)$ is optimistic about growth in AI and optical networking.He thinks Marvell can achieve its goals and gain market share growth in AI networking.
$American Supermicro (AMD)$ AMD's MI 300 performed well but missed market expectations and is cautious about AMD's future revenue guidance.
Future Concerns
Investors should focus on the following areas:
AI capex trends: analyze the AI-related capex of mega-companies such as Google and Amazon to understand the future direction of the market.
Nvidia gross margins: with the introduction of new products such as Grace CPUs and NVLink, it is critical to track changes in Nvidia's gross margins.
Broadcom Custom Chip Revenue: Monitoring Broadcom's performance in AI will help assess its growth stability due to its dependence on large customers such as Google.
Overall, this roadshow report demonstrates that Broadcom and Nvidia have strong market potential in AI despite some challenges.
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