Us call of the day from Beth Kindig, the chief technology analyst at the I/O Fund, who says investors are overlooking a hidden gem among AI kingmakers.
Kindig and her firm have a history of foresight. She predicted in August 2021 that Nvidia’s NVDA rating would surpass Apple’s by 2025. That happened briefly a week ago, and Nvidia continues to hot on the iPhone maker’s heels.
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In a call with Real Vision published on Wednesday, the analyst expanded on another of her predictions, which is that Nvidia is on track for a market cap of $10 trillion by 2030. That would mean a return of more than 250% by 2030, she said.
“In my world, that’s not as impressive as what I might see in other stocks,” Kindig says, adding that while Nvidia’s potential is clearly very strong, rival AMD AMD is looking at much higher returns.
As for how this plays out, Kindig expects “nice moves by 2027” for AMD, which Wall Street has some mixed opinions on. Morgan Stanley recently downgraded AMD, saying investor expectations are far too high for what it can deliver on AI, while others argue the tech company deserves more attention.
Up 152% so far this year, Nvidia stock is crushing AMD’s gain of 8.7%.
Kindig identifies a major hurdle for AMD: Nvidia has 98% of the GPU market (a graphics processing unit is a chip that has been around for a while and is now essential for machine learning) due to the highly advanced CUDA programming platform that developers prefer .
She says they think AMD can find its “niche” here, explaining that while an AMD GPU costs around $10,000 to $15,000, Nvidia’s costs $30,000 to $40,000. And that could be attractive to some big tech companies looking to save some money, although large companies and smaller companies likely have no choice but to choose Nvidia, she adds.
What she wants to see is: “AMD finds that niche… and potentially gives that lower total cost of ownership to big tech companies with these huge capex budgets so they can get their own engineers working with AMD GPUs anyway. Since they can already design that custom silicon, they can certainly work with AMD GPUs,” she said.
The analyst touched on other AI-related stocks, such as Dell DELL, whose shares recently took a hit after earnings results showed rising demand for AI, but expressed concern that the company isn’t making enough money on its AI servers.
Kindig said Dell is a “great company to watch.”
She explains that rival Super Micro SMCI, which also makes AI servers, is nearing production capacity.
“Dell is a very, very big company, even though they have small margins, operating on such a large scale means you just have more money, more profit power… so Super Micro now needs to go out and raise more money” , she says. said.
And the markets are becoming more sensitive to companies that need to raise money right now because of the wariness of anyone or a big company needing to borrow money.
Although Super Micro is a “great” company, Kindig said she owned it last year and closed that position and moved to Dell. “Where will Nvidia or AMD go after Super Micro reaches production capacity? Our guess is Dell.”
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