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'AI supremacy': Nvidia seeing strong demand from Tesla - Morgan Stanley

Published 11/04/2024, 14:54
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According to a research note from Morgan Stanley this week, they continue to hear reports that NVIDIA Corporation (NASDAQ:NVDA) is seeing notably robust demand from Tesla (NASDAQ:TSLA).

The investment bank, in its note titled "Tesla and Nvidia: The Journey to AI Supremacy," said Tesla remains fiercely debated as it faces earnings pressure and its business model "crosses the chasm" from autos towards AI and robotics.

Even though over the next six months the firm anticipates heightened volatility for the electric vehicle maker's stock, they continue to see short-term choppiness, and retain a positive long-term outlook.

Following conversations with AI experts, Morgan Stanley feels that Tesla's "monumental dataset" gathered via its global fleet and the miles traveled could be an advantage for machine learning and neural net training.

"Tesla has predicted that they will reach 100 exaFLOPs of compute by Q4 2024, up from ~4.5 today," said the bank. "Whether the 100 exaFLOP goal becomes reality by then or not, the company would either need to ramp up its in-house Dojo compute capability or substantially increase purchases of Nvidia GPU clusters."

The investment bank explained that with this in mind, they found comments from their US semiconductor analyst following channel checks on Nvidia "quite insightful."

The analyst is said to have stated: "We continue to hear reports of stronger demand outside of the traditional hyperscaler customers, with notably robust demand from Tesla and a wide range of sovereign customers (which remain difficult to triangulate and verify but which, by all accounts, are a strong source of incremental demand)."

The bank added that based on its calculations from last year, it had encountered scenarios where "Tesla could end up being among Nvidia's very largest customers in the future."

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