For some time now, investors have been asking a simple but important question: What’s next for Nvidia (NVDA) once the AI training phase is over? Currently, Advanced Micro Devices (AMD) stands as a strong contender to benefit from the inference boom, a natural next phase to AI training. Investors knew Nvidia wasn’t going to ignore this market, but Jensen Huang kept everyone wondering what he would do about it. Things are becoming clearer now after the chipmaker’s recent announcement.
Nvidia reportedly plans to unveil a notebook PC this year that would run Microsoft’s (MSFT) Windows operating system powered by its own Arm (ARM)-based system-on-a-chip (SoC) platform N1 and N1X, according to rumors circulating in the industry. If true, it would bring some clarity on the management’s intention to diversify away from data center sales, which currently account for over 90% of the company’s revenue. By directly reaching out to the end consumer through its notebook PCs, Nvidia could significantly enhance its Total Addressable Market (TAM), though such adventures come with risks of their own.
Nvidia designs and manufactures GPUs and networking solutions, critical to powering high-end AI infrastructure. The company is a major driver of the global AI boom, enabling companies to train their large language models through its GPUs that are unmatched in the industry. The company is led by Jensen Huang and headquartered in Santa Clara, California.
NVDA stock performed 29% in the last year compared to the iShares Semiconductor ETF’s (SOXX) 50%. This is a significant performance gap for a company that is supposedly powering the AI boom. So what gives?
Nvidia’s recent underperformance is largely due to the simple fact that the stock is already up 10x over the past three years. The company has dealt well with amazingly high expectations, and that has eventually caught up with it. However, the news of a new PC is undoubtedly the kind of story the market was waiting for. The question now is whether the current valuation gives a good entry point for an investor to benefit from this shift in strategy. The answer is a resounding yes!
