Nvidia's GTC 2024 Unveils Blackwell GPU and Expands into Robotics and Automotive Domains As Wall Streets Unsure Growth is Sustainable.

NVIDIA, a tech industry trailblazer, has recently achieved remarkable feats. Renowned for inventing the GPU in 1999, NVIDIA revolutionised PC gaming and ignited modern AI. Today, their work in AI and digital twins transforms major industries.

In 2023, NVIDIA made significant strides in AI and generative AI. Their breakthroughs positioned them to become the world's first trillion-dollar semiconductor stock. Services from companies like Alibaba, Amazon, Google, Meta, Microsoft, Snap, Spotify, Tencent, and 40,000 others rely on NVIDIA AI technologies.

NVIDIA jumped to third place in Fortune magazine and was featured for the eighth consecutive year on the Great Place to Work list of America's 100 Best Companies to Work For. The company is also foundational in building the metaverse with its NVIDIA Omniverse™ platform.

In February 2024, NVIDIA briefly surpassed Amazon in market capitalisation, becoming the fourth most valuable US company. Their latest high-end chip, H200, surpasses the previous H100 used by OpenAI to train GPT-4. The company’s revenue surged by 206% year-on-year to $18.12 billion in Q3 2023, driven by robust data centre growth. As of April, its market capitalisation stood north of $2 trillion.

According to industry analysis, NVIDIA has a runway for the next three to five years. They are well-positioned to lead the shift from CPUs to accelerated GPU computing. This translates to NVIDIA’s growth potentially exceeding the 50% top-line expectation for CY24 and the 25% top-line expectation for CY25.

Similarly, Wall Street analysts are generally optimistic about NVIDIA’s prospects. JPMorgan analyst Harlan Sur praises NVIDIA, pointing out it is “1-2 steps ahead of competitors” and reiterates that NVIDIA’s stock has an overweight rating. 

However, despite these tremendous achievements, many on Wall Street have been raising concerns about the sustainability of NVIDIA’s growth. Understanding the growing uneasiness, CEO Jensen Huang sought to use the company’s annual Graphics Technology Conference (GTC) as a strategic platform to showcase NVIDIA’s technological advancements and reassure investors of its sustainable growth trajectory. 

The event held in March often serves as a developer conference. This year’s edition, kicked off by CEO Jensen Huang, unveiled the highly anticipated Blackwell GPU while also marking Nvidia's significant expansion into robotics and automotive technology.

The Blackwell GPU is a groundbreaking innovation designed for "trillion-parameter scale" generative AI. Promising five times the speed of today's H100 chips for genAI tasks and double the power for training, it represents a leap forward in AI processing capabilities.

However, what truly captured attention was Nvidia's strategic pivot towards robotics and automotive applications. Huang's bold proclamation, "Everything that moves in the future will be robotic," set the stage for Nvidia's ambitious foray into robotics. Building upon its established Isaac platform, Nvidia introduced Project Gr00t (Generalist Robot 00 Technology), a comprehensive framework for powering humanoid robots with advanced AI capabilities.

Project Gr00t includes upgrades to the Isaac platform, enabling robots to understand spoken commands and mimic human movements through advanced vision systems. Nvidia's collaboration with industry leaders like Boston Dynamics and Xpeng Robotics underscores its commitment to driving innovation in the robotics space.

Furthermore, Nvidia's participation as an inaugural platinum member of the Open Source Robotics Alliance signals its dedication to fostering collaboration and advancing the development of robot operating system projects. This strategic alliance, alongside Qualcomm and Alphabet's Intrinsic robotics unit, positions Nvidia at the forefront of open-source robotics initiatives.

In the automotive sector, Nvidia's Drive platform, bolstered by the new Thor version and Blackwell architecture, has garnered significant traction among Chinese automakers. Partnerships with industry giants like BYD and GAC Aion highlight the growing importance of AI-driven solutions in next-generation vehicles.

However, Nvidia's decision to transition its AI foundation models into its paid-for API catalogue raises questions about potential competition with existing models-as-a-service providers like Microsoft and Google. This strategic shift underscores Nvidia's focus on monetising its AI offerings and diversifying its revenue streams.

Despite the groundbreaking announcements, Nvidia's share price experienced a slight decline the day after the announcement, followed by a massive rally for the next three days. However, investors had already factored in the announcements, as the share price has been plunging for nearly two weeks since March 25th, meaning the fears about growth sustainability have not been alleviated. 

Investors should also consider cautiously evaluating the impact of these initiatives on the company's financial performance. As Nvidia continues to expand its presence in the robotics and automotive sectors, the markets remain attentive to its ability to capitalise on emerging opportunities while delivering value to shareholders.