Nvidia is the best way to play AI for the 'next 10 years'

Nvidia (NVDA) shares are falling back today following the chipmaker's recent market high. Rosenblatt Securities senior research analyst Hans Mosesmann joins Market Domination to explain why he is not worried about the stock's bumpy previous weeks. Mosesmann has issued the highest price target for Nvidia on Wall Street.

Mosesmann has a long-term view, explaining that the sale pressure is negligible when one considers that Nvidia is going to be the "best way to play AI for the next 10 years." He adds that Nvidia is not just a semiconductor company anymore but a platform that is "all things AI."

For more expert insight and the latest market action, click here to watch this full episode of Market Domination.

This article was written by Gabriel Roy

Video transcript

Media share is pulling back today.

The A IA I market darling falling further from that record high that it reached not too long ago.

Our next guest though isn't worried about the bumpy path that we have seen for NVIDIA over the last several weeks.

He's got a buy rating on the stock, the highest price target on the street.

We wanna bring in Hans and Moses man.

He is Rosenblatt Securities, a senior research analyst.

It's great to have you here.

So when you take a look at what has been certainly a volatile uh couple of weeks for NVIDIA, some of that sells high pressure on the stock.

Why isn't that worrisome to you?

Well, I, we're entering new territory for NVIDIA.

Um you know, the valuation uh really out of thin air almost over the past year.

Uh The move has been such that it has uh you know, people kind of worked, how is that even possible and it requires you have to have an understanding of what's going on with A I and their leadership position.

So it could be a little bumpy, but from a secular perspective for the next 10 years, this is going to be um the way to play A I uh they're at another level and I think people have uh have to just get used to that and they're not a semiconductor company anymore.

They're a platform, they're all things A I and Hans, you know, I'm assuming I, if you're bullish on NVIDIA two Hans, you must be also then bullish on just the bigger mega trend of A I that, that you must think, you know, y yes, it is this paradigm shift.

And yes, Jensen Wong is right when he talks about, you know how the next industrial revolution has begun, Hans.

Yeah, that's right.

So there are a couple of moving parts and so the cloud, which is where most of Nvidia's business is, is not going to be the home of all things A I as, as time goes on more A I gets done, not up there in the cloud, but in, in the mid edge, the far edge and it opens up the door for more efficient solutions in terms of platform uh hardware and even software.

So there are other players that will benefit uh from that transition such as A and D such as arm uh a little company called lady that we cover.

Uh so there's other participants, but in terms of the value capture of A I, uh NVIDIA may lose unit market share, but they may actually gain value because they're, they're, they're monetizing the entire stack, that's the, the entire rack, the entire software that goes around that.

So it's a formidable uh model that I think people have yet to kind of fully grasp hans what you just said a minute ago there that NVIDIA is no longer just a chip maker.

It's all things A I that has actually captured the attention of regulators around the world.

And earlier this week, we got the Reuters report out that actually France is looking to, to uh and media is setting a potentially facing some antitrust charges there in France.

I'm curious to you just how you're assessing that risk from an analyst's perspective and what to what extent this could ultimately be a worrisome a headwind here for the stock.

Yeah, I think that uh uh NVIDIA competitors and NVIDIA observers and countries get worried about uh a company that is grasping or, or capturing all of this value.

So there is a knee jerk reaction in some cases to stop that they've already endured.

The, the US basically with these restrictions on China, 20 25% of the business is basically gone and they're still basically sold out.

So it's something to watch, but they are not being predatory.

And in the least, even though prices have been moving up, it's not the the price of the chip or the board of the rack that is driving this business.

It's the value created by the total cost of ownership.

It's a different metric that we in the semiconductor industry are not used to.

Right.

You can double the price of this product and it provides significant tco you know, performance per watt per cubic foot per dollar advantages that nobody can meet.

Right.

It's, it's not like uh there's another guy that can do it, maybe a MD capture some share here, but that's, it's a little different.

But yes, it's something to monitor in France is something that kind of raises eyebrows and so on.

But at the moment, I don't think it's going to lead to anything because they are being, they're being fair in terms of how they price their products.

In my opinion, Hans, as you know, you know, Jensen is, is built out this platform as he expands Hans, you know, he he moves into new areas, new verticals are there companies that you think should be worried.

Well, so the traditional way of, of doing things in silicon or are, are changing so that the, the, the let's call the general purpose server market is being, you know, really destroyed in terms of value by moving to an accelerated cycle.

So, you know, guys like Intel and even A and D, if A and D didn't have a GP U, for example, they'd be in big trouble.

Uh so they are changing the way compute is done.

And so the next wave of where a value capture for NVIDIA, if you look at say the cloud for example, are networking areas, storage areas.

And so you, you start to kind of bring in those areas in terms of value and you maximize the interface between networking and storage with the computer, the accelerated compute.

So I think that the traditional networking uh players and storage players probably have uh to deal with this.

There are ways to get around that, for example, Broadcom and Marvel uh which are, you know, big players in networking, they have the ability to do custom chips.

And so some of the hyper scalars don't wanna use NVIDIA all the time, they wanna do their own custom, highly efficient, very expensive accelerators.

And so there's another kind of theme that is counter to that, but it is interesting how if you look at Nvidia's roadmap, how they expect to capture not just the, the GP U the compute, but the entire rack and everything that goes inside of rack and, and a data center hans, there's been more and more talk about some of the competitors within this space, even when you take a look at Mikron, that has certainly gotten a lot of tension here.

I'm curious just what you think of that comparison and then more specifically, some of that price action that we've seen on Mikron since its earnings report, what is the street missing that you see given your bullish thesis there?

So my, my top two picks for this year are the ones that have kind of underperformed here, a bit of late uh A and D and micro.

So Miron is an enabler.

Uh they're not a competitor, it's NVIDIA.

So they uh uh micro provides uh very uh useful and a fundamental memory be it DDR five, which is more commoditized or this new high bandwidth memory which the industry is currently constrained, uh probably sold out for the next year, maybe a year and a half.

So NVIDIA needs Mikron and Samsung and Hex to, to bolster their production, get their eels, right?

A MD is more of a competitor and coming from nowhere and A MD is being helped by hyper scalars and Broadcom and some of the networking guys, as you can see an emerging battle of the titans where a lot of the industry, hyper scalars chip companies which are feel threatened by NVIDIA are kind of teaming up to, to, to do battle with what I would call, you know, like a Godzilla, like, like a personality here.

Uh when NVIDIA that, you know the green, the green monster, if you will.

So that's kind of how things are playing out.

It'll be a, a battle that will last a long, long time.

But I think NVIDIA has the advantage here.

Uh over time, you can think of this as you know, an apple with the iphone and that ecosystem doing battle with Android, they kind of coexist.

Um But uh that's how I, I think it could play out Hans.

Great having you on the show today.

Thanks for making time for us.

You got it.