As per the observation of an analyst, Nvidia Corp. has several important growth drivers that may help the firm treble its data-center sales by 2025. According to Vivek Arya of Bank of America, the data-center business could become Nvidia’s NVDA, -0.10 percent largest segment in a few years as the company capitalizes on increased adoption of artificial-intelligence propulsion systems, builds momentum in data-processing units (DPUs), and encapsulates a “modest” chunk of the global for server central-processing units (CPUs).
Arya, who is more optimistic about the firm’s prospects, added that the company is poised to become a “one-stop-shop” for artificial intelligence processing. He increased his price estimate on Nvidia’s stock to $900 from $800, making it the biggest among Wall Street analysts’ targets. Nvidia’s AI accelerators are expected to become more popular as AI becomes more common and sophisticated, according to Arya. He stated that the accelerators are “particularly built for the efficient processing of AI workloads like neural networks” and can assist deliver “the near-instantaneous results that make AI applications “profitable” without putting a load on the electricity grid
According to him, the business has leading technology for these workloads, and AI accelerators may more than quadruple their proportion of the server market by 2025. DPUs, which are programmable processors that can assist servers to function more efficiently and consistently, offer another potential. Although DPU adoption is currently in the “low-to-mid single digits,” Arya estimates a market opportunity of more than $10 billion over the next five years, with an annual growth rate (CAGR) of around 80%. Nvidia is also expected to gain traction in the server CPU market, according to Arya, after the firm revealed earlier this year that it planned to introduce a data-center CPU, dubbed Grace, that would include technology from Arm Holdings PLC, which Nvidia is attempting to buy.
“Grace is being targeted to meet certain workloads, notably those that result in maximum computing and Giant AI, a small piece of the $30 billion server CPU market,” Arya said, predicting that Nvidia might gain a “modest but still important 5 percent share.” He described Nvidia’s introduction of the server CPU as the company’s latest move to promote consolidation in its hardware stack.