Nvidia's (NASDAQ: NVDA) AI chips are currently unrivaled in the marketplace, and the company can charge an exorbitant price for them. However, times could be changing. Intel’s (NASDAQ: INTC) Gaudi chip looks set to become equally as respected as Nvidia’s offerings, while another of its competitors, AMD (NASDAQ: AMD), is introducing a similar product that may be popping off in 2024. If true, this could bring on a dramatic decline in the cost for Nvidia chips. The cloud providers, namely Microsoft (NASDAQ: MSFT), Amazon (NASDAQ: AMZN), and Alphabet (NASDAQ: GOOG, NASDAQ: GOOGL) have all taken to launching their own AI chips as well, widening the pool of competition for Nvidia.
Meanwhile, tech publication STH ratted out that, primed up against Nvidia’s editor pick H100, less expensive Gaudi 2 was reported to have up to 2x faster performance than its rival. Even more telling, Gaudi 2 had a beneficial impact on total lifetime expenses when compared with the H100, further solidifying its resolve to customers looking for an inexpensive alternative to the popular Nvidia chip. STH furthermore claimed Gaudi 2 to be supply-constrained, meaning that production is lower than customers that want to buy it and demonstrates its large adoption in the early stages.
Ultimately, whether customers opt-in for Intel or AMD alternatives, or major firms launching their own, the consensus is that fees for NVDA chips will plunge leaps and bounds in 2024. This would signal a 15% – 25% downside to closing stock prices, appreciated by the investors of said stocks. Technically, NVDA stock is currently 65 times higher in earnings and 27 times across sales – immensely overpriced for a large firm, and thus I recommend investors to wait up until a major pullback arises before investing into such said stocks.
