Nvidia's Position in AI Hardware Market

Investing.com – Nvidia (NASDAQ:NVDA) is "well-positioned" to capture most of the expected growth in the market for specialized artificial intelligence-enhancing hardware in 2025, according to analysts at Piper Sandler who call the chipmaker its "top large-cap pick."

The analysts, led by Harsh Kumar, predict a multibillion-dollar total addressable market for AI accelerators will increase by roughly $70 billion in 2025. These accelerators assist in powering AI in devices like mobile phones and laptops while also playing a crucial role in cloud computing servers.

Described by some experts as a "moat," Nvidia's AI graphics processors, including its H100 offering, have become essential components in the effort to train and deploy AI models.

Nvidia's latest AI chip, known as Blackwell, is also witnessing strong demand even before its public launch, according to CEO Jensen Huang. The Piper Sandler analysts estimate that Blackwell will be released to the general public in Nvidia's January quarter and is expected to account for "several billion dollars of revenues."

The analysts noted, "We see Nvidia well positioned to capture most of the incremental total addressable market increase while ceding only a small bit to its merchant chip competitors." They project Blackwell sales alone will be at the upper end of the $5 billion to $8 billion range despite concerns over tight supplies.

However, the soaring demand for AI chips has also left firms like Nvidia struggling to provide adequate supplies. Piper Sandler analysts anticipate these constraints will likely continue through at least the first half of the 2025 calendar year.

Despite this, Nvidia's market cap has surged by 9.3% to $3.26 trillion in October, partly fueled by a strong AI demand outlook from Taiwan Semiconductor Manufacturing Corp, the world’s largest contract chipmaker. Nvidia is set to report its latest quarterly results on Nov. 20, having been valued at $3.62 trillion before the start of trading on Wall Street on Monday.