Nvidia stock rallies 9% with a $1 Trillion opportunity

Nvidia has a promising future, according to investors.

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After GTC 2022, it appeared as if Nvidia failed to impress investors with their myriad of announcements, despite the clear leaps in technology and computing power that products like Hopper and their AI infrastructure would allow. They also mentioned some rumblings about advanced robotics, in addition to a ‘VR omniverse’. But, the thing is that all of these announcements were pretty much expected and already ‘priced in’ to the value of the stock, which meant that the stock markets over at Wall Street didn’t shift over their price targets, but now, everything has begun to change, as Nvidia is currently enjoying a rally on the market that saw stocks rise to around 9.82% as of the time of writing. So, what’s changed?

A $1 Trillion USD market, ripe for the taking

The thing that made the difference it appears is a near $1 Trillion USD value in the growth areas that the business currently specialises in, this includes the Automotive industry, worth $300 Billion USD, an addition $300 Billion for its chips and systems, $150 Billion in Artificial Intelligence software for the enterprise industry, $150 Billion in its ‘Omniverse’ enterprise offerings, and finally, $100 Billion for gaming.

It’s a tidy golden number for the company, where Investors will clearly be taking historically to see if Nvidia can indeed make these dreams come true, and with a 20-year history of investing in research and development in the industry, and world-class skills, this should make the offering by the Taiwanese chip manufacturer look even more attractive in the eyes of investors.

This is nothing new, but it appears that a statistic breakdown into the way that the number will be achieved appears to not only be believable for the business, but also attainable for them when looking at historical numbers, too.

 Stacy Rasgon at Bernstein (via Marketwatch) stated that the prime opportunity comes from the cohesive Onmiverse offering, which honestly still seems pretty nebulous, despite Nvidia being a prime candidate for capitalising on this kind of market, before setting a price target on Nvidia’s back to ‘Outperform’ at $350 USD.

“We have joked at times that (despite being Gen-X) we feel a little too ‘boomer’ to wrap our heads around what Omniverse/Metaverse means here, but we think we are starting to get an inkling of what might be possible as we go down this road,” 

Stacy Rasgon – Bernstein

Nvidia is more than just gaming

With their fingers in a lot of pies, with access to dozens of technologies, Nvidia’s software market, seeped in their investments into AI and research, which borne several industry-shattering technologies like DLSS says that the software market appears to be at least ‘three times larger than that for gaming’, which is particularly notable as the gaming segment of Nvidia’s proposition currently account for ‘45% of Revenue’ states Chris Caso, a Raymond James analyst.

This means that if you are to extrapolate these values into pure revenue at Nvidia, you might be able to see a bigger picture where gaming becomes a piece of the pie, instead of being a larger vision of it. This is because Nvidia has been eager to branch out into other markets, including powerful, enterprise-class chips and solutions that the market will be eager to lap up in anticipation, having built their entire brand off of having some of the most powerful consumer graphics chips that money can buy, bolstered by an ever-strengthening offering of software which looks to disrupt the entire consumer graphics markets.

Nvidia could partner with Intel’s chip foundries

Stock for Intel also rose around 7% on Thursday after Nvidia CEO Jensen Huang stated that they’re interested in potentially using Intel foundries to make their next-generation chips, but this is likely a very long-term discussion, as booking time in the foundry will take years, and that supply chain integrations can take years. For now, Nvidia is due to go with TSMC for its Lovelace processors. But, Huang has also stated that ‘Intel has known our secrets for years’ when talking to reporters, as Reuters reports.

Again, this partnership might not even bear any fruit, as this is no small task, Nvidia has previously teamed up with Samsung for its Ampere lineup of GPUs and is currently slated to use TSMC for Lovelace, so we wouldn’t be surprised if they look to switch it up again, especially since TSMC bookings are looking to be in intense demand at rival companies such as AMD.

Into the Omniverse

We once again see the ‘verse’ moniker being thrown around pretty needlessly and doesn’t mean too much. However, Nvidia’s vision for an omniverse looks a little bit different to many other businesses. The Omniverse isn’t a shared social space where you’re going to buy NFTs for grandma, unlike what HTC wants, but Nvidia’s Omniverse is something much more tangible, and potentially much more lucrative in the long run.

Omniverse ties together various development platforms into creating solutions for a burgeoning Metaverse, which countless companies are investing into in order to get a slice of the pie that will inevitably come from this. The masterstroke from Nvidia comes by not building a Metaverse themselves, but by selling the tools and facilitating the creation of one using technology that they’re already sat on, with assurances that a number of companies are heavily investing into the space.

The genius of this is that Nvidia will get paid to supply the technology, and have no part in seeing whether or not any of the numerous gambits into creating a metaverse are even successful at all. Nvidia describes the Omniverse as ‘a modular development framework’ to help build tools and services. This could easily mean that we could see Nvidia’s Omniverse powering many of our seemingly impending interactions in the Metaverse, powered with their various technologies.

With the industry beginning to come out of the global semiconductor shortage, the businesses which make their bread and butter of these chips look stronger than ever before, with consistent demand for their products throughout the pandemic, and with no signs of stopping, Nvidia isn’t going anywhere, and neither are its competitors, which will make for an incredibly interesting few years as the market continues to mature.