Baird Keeps Nvidia’s Outperform Rating and $275 PT

Baird analyst Tristan Gerra reiterated an Outperform rating and $275 price target on Nvidia.

“Wednesday after the close, Groq’s (private) CEO announced a non-exclusive licensing deal with Nvidia whereas Nvidia will pay $20B in cash to access, develop and deploy Groq’s AI inferencing technology.

GroqCloud will continue to operate independently. Jonathan Ross, CEO of Groq, will join Nvidia and is a former Google engineer and executive involved in the creation of Google’s Tensor Processor Unit project.  

This announcement is in line with Nvidia’s push into AI inferencing. Nvidia is reportedly retreating from its SuperCloud (DGX Cloud) initiative, which aimed to offer GPU-based cloud services directly to enterprise customers, was presumably designed to fend off hyperscalers’ AI push using their own custom ASICs, but could have ended up competing with Nvidia’s own key customers.  

It has also been previously reported that Nvidia has hired a large team of engineers as part of a custom ASIC program.

As custom ASICs designed for AI cloud services face the same barriers of entry as AMD in GPUs against Nvidia’s CUDA ecosystem, we think Nvidia’s vast lead in software libraries could be significantly accretive to the Groq platform.”

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