JPMorgan analyst Harlan Sur predicts a surge in capital expenditure (capex) for Nvidia Corp NVDA in 2024, fueled by growing AI infrastructure investments.
Sur has given Nvidia stock an Overweight rating, with a price target set at $850.
AI as Catalyst for Cloud Datacenter Capital Expenditure Growth
Forecasts for cloud datacenter capex paint a lucrative picture, with a 14% growth estimate attributed to the rise in AI infrastructure build-up and datacenter expansions. The updated JPMorgan outlook anticipates a noteworthy $15 billion surge in datacenter capex, with substantial allocations towards server technology and ancillary infrastructure such as networking and storage.
This momentum extends beyond major cloud service providers (CSPs) to also encompass Tier 2 CSPs, with Apple Inc AAPL taking the lead.
Nvidia’s GPU Business Fueled by AI Demand
The heightened focus on AI infrastructure is driving the demand for Nvidia’s GPU solutions, creating a sustained uptrend in demand over multiple quarters. Sur emphasizes that AI demand acts as a pivotal force for Nvidia’s datacenter GPU business, particularly benefiting from increased AI server expenditures.
Furthermore, there is a noticeable shift in spending mix towards GPUs and accelerators, prompted by the proliferation of AI and accelerated computing applications. Nvidia aims to capture a larger market share in the expanding datacenter infrastructure industry by capitalizing on its GPU-centric architecture tailored for various AI workloads.
Nvidia’s Emphasis on Software Monetization in AI Sphere
Apart from hardware, Nvidia is actively pursuing software monetization strategies in the AI sector, targeting enterprise clients with enhanced software monetization approaches. This strategy complements Nvidia’s hardware offerings and unlocks fresh avenues in the market.
Overall, JPMorgan foresees significant growth potential for Nvidia, underpinned by strong performance across segments such as PC gaming, data centers, automotive, and enterprise. The consistent demand for AI-related technologies positions Nvidia for sustained growth and market dominance.
By leveraging its GPU-focused approach and advancing software strategies, Nvidia is well-positioned to capitalize on the evolving AI and accelerated computing landscape, driving both revenue growth and market expansion.
