Nvidia (NASDAQ:NVDA) and OpenAI’s massive deal announced on Monday signals no slowdown in the artificial intelligence buildout as Wedbush pronounces the AI revolution is striking a new stage of growth.
The numbers behind the deal are staggering. Nvidia plans to invest up to $100B into OpenAI to build and deploy at least 10 gigawatts of data center capacity. Nvidia will provide 4M to 5M graphics processing units. Wedbush noted that this figure totals the entirety of the number of GPUs Nvidia will ship in 2025 and double what it shipped in 2024.
“This announcement cements further ties between Nvidia and OpenAI to lead the AI Revolution taking place front and center while providing OpenAI with ample sources of capital at cheaper costs by reducing the credit risk of lending with OpenAI,” said Wedbush analysts, led by Daniel Ives, in an investor note.
The ongoing data center buildout proves positive for cloud giants such as Microsoft (NASDAQ:MSFT), Google (NASDAQ:GOOG)(NASDAQ:GOOGL) and Amazon (NASDAQ:AMZN).
Wedbush also pointed out large-scale AI investments recently announced around the globe, such as in the United Arab Emirates, Saudi Arabia and the United Kingdom.
“While the bears will fret about valuations and have been skeptical of the historical tech rally, we stress that if you focus solely on valuation looking out a year with P/E…you would have missed every transformational growth tech stock the last 20 years,” Ives added. “Names like Palantir (NASDAQ:PLTR) will further grow into their valuations over the coming years in our view, and while healthy pullbacks will happen…we believe Palantir is a trillion market cap in the next 2-3 years given its AI secret sauce that is disrupting the software landscape like an earthquake.”
Wedbush rates all five names listed in this report at Outperform. It has set a $200 price target on Palantir, $210 on Nvidia, $250 on Amazon, $245 on Alphabet and $625 on Microsoft.