Nvidia (NASDAQ:NVDA) stock has seen a 16% drop this month, but remains a buy on the dips. Despite the recent decline, its year-to-date increase of 65% makes it one of the top AI stocks long-term investors continue to buy. Investors should focus on the company’s upcoming earnings report for insight into its growth outlook and AI spend.
The company is a leading AI supplier, providing hardware and software for AI development. Investors see Nvidia as a top pure-play option for this industry. Here are three catalysts to consider when analyzing Nvidia.
Run.ai Acquisition
Recently, Nvidia acquired Run:ai, an Israeli startup specializing in GPU orchestration software. This goal of this move appears to be to boost Nvidia’s AI computing resource management.
The deal details, including the acquisition cost, remain undisclosed. Run:ai provides an open platform built on Kubernetes, enabling efficient management of compute infrastructure across various environments.
The acquisition provides customers a centralized interface for managing shared compute infrastructure, streamlining access to AI workloads. Run:ai’s platform enables efficient GPU cluster resource utilization through pooling and sharing.
Nvidia plans to maintain Run:ai’s products and align its roadmap with its DGX Cloud AI platform, benefiting customers with generative AI deployments.
Since 2020, Run:ai has collaborated closely with Nvidia, and the acquisition solidifies this partnership. This acquisition aligns with NVIDIA’s AI infrastructure goals.
Improving Microsoft’s Phi-3
Nvidia announced plans to contribute to Microsoft’s (NASDAQ:MSFT) Phi-3 mini language model with the company’s TensorRT-LLM. This library optimizes large language model inference on NVIDIA GPUs, from PCs to cloud servers.
Phi-3 Mini handles 10 times larger models than its predecessor, Phi-2, making it suitable for broader applications. With 3.8 billion parameters and trained on 3.3 trillion tokens in just seven days, Phi-3 Mini introduces two variants, setting a new standard for handling more complex tasks with less compute resources required.
The integration of Phi-3 Mini extends to robotics and edge devices, offering efficient generative AI capabilities. With 3.8 billion parameters, Phi-3 Mini is perfect for edge devices, maintaining performance while conserving resources.
TensorRT-LLM supports Phi-3 Mini’s advanced context window, boosting throughput with optimizations like LongRoPE and inflight batching.
AI Popularity in Synthesia
Synthesia, an AI firm backed by Nvidia, introduced new AI-generated digital avatars that express human emotions from text inputs. These “expressive avatars” bridge virtual and real characters, aiming to cut costs in video production by eliminating cameras, actors, and lengthy edits.
Synthesia’s London studio trained the system with actors reading scripts in front of a green screen.
The video AI platform demonstrated AI-generated avatars responding to text input with corresponding emotions.
The technology serves over 55,000 businesses, including half of the Fortune 100. Synthesia, a unicorn firm, raised $90 million last year from investors like Accel and Kleiner Perkins.
Bottom Line
Overall, Nvidia remains the top option for investors looking to gain picks-and-shovels exposure to the AI race. The company’s hardware and software products are becoming increasingly integral to any operator in this space.
As Nvidia’s client base and market share grows, so too does its pricing power and market dominance.
Until AI spend cools down considerably, Nvidia is likely to have much more room to climb higher. This remains a top stock growth investors may want to buy on dips (it’s not expensive at all on a forward-looking basis, and I thought I’d never say that).
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
