NVIDIA takes a big step towards dominating the artificial intelligence market against AMD and Intel

According to a new report by investment bank JPMorgan, chip designer NVIDIA Corporation stands to benefit greatly from the growth of artificial intelligence.

JPMorgan estimates bright future for Nvidia

NVIDIA shook up the stock market with its Q1 2024 earnings report, where it far exceeded analysts’ revenue forecasts for the current quarter and highlighted un enormous $1 trillion market for companies choosing to move to artificial intelligence platforms for their data center operations. On this basis, JPMorgan published new estimates for NVIDIAestimating that the company can appropriate up to 60% of artificial intelligence sales this year thanks to its hardware products, such as graphics processing units (GPUs) and networking products.

At the same time, AMD continues to outpace Intel in CPU growth in the cloud computing market, but Intel remains the dominant product supplier, according to KeyBanc data.

The JPMorgan report, shared by MarketWatch, outlines the bank’s expectations for the revenue stream from artificial intelligence products this year. Following NVIDIA’s stellar results earlier this week, banks jumped into the fray and began presenting their optimistic forecasts for the rest of the year.

The first of these came from Bank of America and focused on the outlook for Taiwan Semiconductor Manufacturing Company (TSMC). BofA reported that NVIDIA’s expectations of $11 billion in sales in the current quarter, will also translate into higher sales for TSMC. in the second half of 2023. The report also reiterates rumors that TSMC’s 5-nanometer chip manufacturing facilities are experiencing higher utilization levels due to strong product demand from NVIDIA.

The image shows the impact of NVIDIA's earnings on TSMC's share price on the Taiwan stock market.
The impact of NVIDIA’s earnings on TSMC’s share price on the Taiwan stock market.

JPMorgan believes NVIDIA will be the main beneficiary of AI spending this year. Its report states that up to 60% of revenues from AI products in 2023 will land into NVIDIA’s pockets through GPU spending and network interconnects. In second place is Broadcom, with its application-specific integrated circuits (ASICs) expected to take up to 13% of the revenue pie.

TSMC is relatively low down the list, at number 17, with expected revenues representing 3% of total spending. Although Intel and AMD also make an appearance, their revenue percentage is negligible at under 1%. Intel is expected to supply AI server processors, while AMD is expected to supply both server processors and GPUs.

When it comes to the cloud computing market, KeyBanc’s estimates show that AMD’s market share continues to grow faster than Intel’s. Its data reveals that AMD’s market share grew by 77% year-on-year and 3% month-on-month in April. By comparison, Intel’s monthly growth remained stable, while its annual growth remained steady.

Concerns about future stockers for PC gamers

These predictions about Nvidia could turn sour for PC gamers and the gaming graphics card market, leaving the company to push even further into the AI sector and putting gaming on the back burner. Some already see a future shortage of graphics cards and new prohibitive prices in the future, which could definitely lead Nvidia to prioritize its cloud gaming service, Nvidia Geforce Now. The demand for GPUs from professionals will become ever more pressing as the AI narrative ignites the tech world for better or worse. It remains to be seen whether AMD and Intel will be able to benefit from such a scenario in the gaming PC market.