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Nvidia (NVDA) Stock Gains as Analysts Become Bullish on AI Future

Shares of Nvidia Corporation NVDA gained more than 2.5% in early morning trading Monday after several key analysts noted that the graphics chipmaker is positioned well in several emerging tech markets, including the artificial intelligence space.

In a recent note to clients, Citigroup analyst Atif Malik praised Nvidia’s new partnership with Chinese internet giant Baidu BIDU, which will see the two companies work hand-in-hand on a number of AI-based projects.

Baidu will work to implement Nvidia’s Volta GPUs into its cloud infrastructure, while Nvidia will provide its Drive PX system to Baidu’s ongoing self-driving car programs with Chinese automakers. Nvidia’s Volta GPUs will also be optimized for Baidu’s PaddlePaddle open source deep learning platform.

Malik mentioned how Baidu’s chief operations officer recently said that China is entering an AI era, and the search engine behemoth is poised to break into that market.

“On top of the core business (search, mobile Baidu, and newsfeed), Baidu has expanded into new businesses like finance, cloud service, DuerOS, and autonomous driving all based on its AI technology,” Malik said.

The analyst would ultimately conclude that Nvidia will also benefit from continued adoption of artificial intelligence technology.

In addition to its agreement with Baidu, Nvidia also recently announced a partnership with Volkswagen VLKAY, Volvo, and Autoliv ALV to develop next-generation software systems for self-driving cars (also read: NVIDIA Partners With Volvo Cars and Autoliv Select).

In a similar vein to Citigroup’s note, a recent report from Jeffries mentioned Nvidia as a leader in what the firm is calling the “4th tectonic shift in computing.”

According to Jeffries, every 15 years, an accumulation of technological innovations creates “tectonic shifts” in the existing computing model. The firm cited three previous shifts: a shift from mainframes to mini-computers in the 60s, a shift to PCs in the early 80s, and a shift to cellphones and data centers in the late 90s.

“We believe we are at the start of the 4th tectonic shift now, to a parallel processing / IoT model, driven by lower memory costs, free data storage, improvements in parallel processing hardware and software, and improvements in AI technologies like neural networking that make it easy to monetize all the data that is being stored,” the firm wrote.

Jeffries raised its price target for NVDA to $180 from $140, citing its belief that the company will be a “key beneficiary” of this new tectonic shift. The firm also noted Nvidia’s “pole position” in deep learning applications and its decade long investment in parallel programming as reasons to be bullish on the stock.

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