NVIDIA Shares Added 5% Ahead of News of a New Processor Release
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NVIDIA, an American manufacturer of GPUs and microchips, decided to undermine Intel’s share in server processor the market and announced the release of a new chip. Let’s find out why this chip is so good, when it will be released, and how the stock market has responded to this news.
NVIDIA will release a central processor called Grace
On April 12th, on the first day of the GPU Technology Conference (GTC), the CEO of the Nvidia Corporation Jen-Hsun "Jensen" Huang announced the company was building Grace, a new Arm-processor.
The American company holds this event to present and announce new technologies. Apart from Grace, this year Nvidia presented new video cards, graphics and server units, as well as Nvidia Jarvis, a framework for creating dialogue AI.
What is so good about NVIDIA Grace?
A new chip named after an American scientist Grace Hopper was developed based on the Arm technology. It is intended for data processing centers to solve the most difficult tasks using artificial intelligence in computations.
According to Mr. Huang, thanks to the Grace processor, the server performance during the execution of difficult graphic tasks and high-speed computations by artificial intelligence will be ten times as high. At the same time, power consumption will go down.
NVIDIA shares rose
Investors were very positive in their response to the news about building a new high-performance processor Grace. On April 12th, NVIDIA shares (NASDAQ:NVDA) added 5.62%, up to $608.36. The next day, they continued moving upwards and added 3.09%, up to $627.18.
We remind you that the market of chips for data centers is mostly dominated by another American company, Intel. Its share in this niche is above 90%. However, the piece of news about Grace immediately influenced Intel’s as they dropped 4.18$, down to $65.51, on Monday.
NVIDIA in the market of chips for data centers
According to Motley Fool, the importance of such niche as the development of chips for data processing centers for the company increases with every passing year. In 2020, the profit from this segment was $6.7 billion.
Let’s compare it with the numbers from the company’s core business area: last years’ profit from selling game processors reached $7.76 billion. The management is expecting the sales volume in the new niche to skyrocket by 124%, while the main business – only by 41%.
NVIDIA and Arm
As far back as last autumn, Huang’s company tried to buy a British microchip developer Arm from SoftBank reportedly for $40 billion. However, Qualcomm, Microsoft, Google, and other representatives of the IT sector approached American antitrust authorities.
Big Techs expressed their fears that the deal with Arm might kill the competition in this segment and do a lot of damage to other players in the market. However, we should note that the American chipmaker didn’t give up the idea of buying Arm.
Technical analysis of NVIDIA shares
An analyst and R Blog author Maksim Artyomov says:
“Development of a new chip helped NVIDIA shares to continue rising. From February to March, its price was plunging and almost broke the 200-day Moving Average – for some traders it was a signal in favor of the decline. But everything turned out to be quite different and, after rebounding, the price started recovering. The reason for this was probably rumors about a new chip and, after this information was confirmed, the situation for NVIDIA got even better.
In the last couple of weeks, the price broke all possible resistance areas and continues moving within the ascending tendency. During yesterday’s trading session, the price updated its highs and demonstrated another rising impulse that reached a new all-time high for NVIDIA at $627.69.
The company’s near-term outlook is looking great. Despite the fact that there are no technical levels on its way up, the price may test the psychologically important level of $650.00 in the nearest future, which is another all-time high for the asset. At the same time, one shouldn’t exclude a possible correction of the price on its way towards the target. This correction may get the price back to the support level at $613.00, and after it is over, the asset may resume skyrocketing.”
Summing up
NVIDIA announced it was building a high-performance Arm-processor Grace for data processing center servers and AI computations. This news helped NVIDIA shares to rise by almost 6%, while shares of Intel, the company that ate up this market a long time ago, dropped 4%. The GPU release is scheduled for 2023.
