Nvidia's competitive moat in processors for artificial intelligence is sustainable, including the area of AI inferencing, based on comments from the company's chief executive. And that bodes well for Nvidia stock.
In a client note Monday, Melius Research analyst Ben Reitzes said he is more confident in Nvidia's outlook after Chief Executive Jensen Huang addressed the company's competitive positioning recently on the BG2 podcast.
Nvidia skeptics say the company has no competitive moat when it comes to AI inferencing, as opposed to training. They say custom application-specific integrated circuits will dominate that market.
But Huang said Nvidia's "moat will be greater" in inferencing due in part to the company's Cuda software and NVLink networking.
Plus, Nvidia is constantly reworking its algorithms and making sure its older chips work with new applications, Reitzes said.
Also, Nvidia is far ahead of competitors in making complete AI data center systems, he said.
Huang said the information technology market is only in "inning two" of upgrading systems to be AI capable. The market so far has spent about $150 billion out of $1 trillion in needed upgrades to "old IT infrastructure," he said.
Reitzes rates Nvidia stock as buy with a price target of 165.
Nvidia Stock Nearing Record High
On the stock market today, Nvidia stock rose 2.4% to close at 138.07.
Nvidia stock is approaching a buy point of 140.76 out of a 17-week consolidation pattern, according to IBD MarketSurge charts. That buy point is also the stock's all-time high, reached on June 20.
Elsewhere on Wall Street, TD Cowen analyst Joshua Buchalter reiterated his "top pick" buy rating on Nvidia stock with a price target of 165.
Nvidia is "the far-and-away tech leader in AI," Buchalter said in a client note Sunday.
Morgan Stanley analyst Joseph Moore also called Nvidia stock his "top pick" in a client note Monday.
Nvidia stock is on six IBD lists: Leaderboard, SwingTrader, IBD 50, Sector Leaders, Stock Spotlight and Tech Leaders.
Follow Patrick Seitz on X, formerly Twitter, at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
