Tech guru Cathie Wood says Nvidia is the Cisco of the artificial intelligence boom and warns its growth could slow

Cathy Wood.David Swanson/Reuters

  • Cathie Wood’s outlook for Nvidia is one of slower growth, weaker demand and more competition.

  • The Ark Investment chief executive compared the chipmaker’s surge to that of Cisco during the dot-com bubble.

  • Wood cut her investment in Nvidia because she believed the market’s hopes may have been exaggerated.

Kathy Wood The alarm bell has sounded Nvidiawarning that its alarming growth is may slow downand compare it Inventory surge Cisco during the dotcom bubble.

The tech evangelist and CEO of Ark Invest made the compelling comments during a speech letter disclosed to shareholders on Thursday.

She compared Cisco, which saw demand for networking hardware during the dot-com boom of the early 1990s, to Nvidia, which is selling record numbers of graphics chips as companies developing artificial intelligence today.

It’s a “kind of technology moment,” Wood said. She recalled that Cisco’s stock price soared 31-fold in the 3.5 years to March 1994, only to drop 51% over the next four months as recession fears and the launch of rival products led to customer reductions. Order.

The stock rebounded to 71x by the peak of the dot-com bubble in March 2000, but then plummeted about 90% over the next few years and has not been close to its dot-com peak since.

“Today, Nvidia is that company,” Wood said, highlighting that the microchip stock has risen 117-fold in nine years since February 2015 and 23-fold since October 2018. crypto winter Chip sales were hit hard, causing Nvidia’s stock price to fall 56% in three months.

growing up very fast

Wood’s point seems to be that just as Cisco’s routers and switches sparked the Internet revolution, Nvidia has become the defining company of the artificial intelligence era. When a company plays such a key role in a new technological paradigm, it can see huge swings in the artificial intelligence era. its share price.

In fact, Nvidia has grown at an astonishing rate in recent quarters as the company has evolved. like tesla and oracle have rush to buy its chipsBut frantic buying could mean customers end up with double or triple the amount they need, Wood said.

She also pointed out that Nvidia’s growth has slowed this quarter, with the wait time to obtain chips shortened from as long as 11 months to just three months, and supply signals are catching up with demand.

“We wouldn’t be surprised to see a pause in spending without explosive growth in software revenue to justify overbuilding GPU capacity,” Wood said.

As Nvidia’s customers begin to process and reduce inventory, they may also spend less on chips, she continued.

She added: “In the long term, unlike Cisco’s history, competition is likely to intensify not only because of AMD’s success but also because Nvidia’s customers — cloud service providers and companies like Tesla — are Design your own artificial intelligence chip.”

Nvidia CEO Jensen HuangNvidia CEO Jensen Huang

Nvidia CEO Jensen Huang.Sam Yeh/AFP/Getty Images

Wood clearly sees Nvidia’s performance in terms of slower growth, reduced spending and increased competition. But she also made it clear that significant advances in artificial intelligence in recent years have shown that “anything is possible.”

The fund manager has become increasingly wary of Nvidia in recent months. disclosed In February, she cut Ark’s investment in the stock because “expectations may have exceeded expectations.”

In fact, Nvidia’s stock price has soared nearly 90% this year, giving the company a market value of more than $2 trillion. Its market value is now more than Amazon or Alphabet, and only 13% behind Apple. 1/47 of the value As an iPhone maker ten years ago.

of the ark website It shows it holds just $64 million worth of Nvidia stock across various funds, while its two largest funds hold $1.3 billion worth of Coinbase stock and $788 million worth of Tesla stock. Nvidia currently ranks 41st among nearly 200 funds.

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