Analyzing the Expanding Server Landscape
A team of Mizuho analysts performed an in-depth investigation into the larger server landscape and the AI industry's future. The study was prompted by expectations that GenAI (generative AI) would consistently stimulate demand. The analysts see "a significant opportunity for GPU supplier NVDA" as they predict the total addressable market (TAM) to expand tenfold within the next five years, hitting a massive $400 billion.
Potential Windfall for Nvidia
In their note to clients, the analysts predicted that "AI server unit penetration could reach approximately 11% by 2027, with Nvidia holding a conservative 75% share (vs. 90%+ today), potentially leading to a substantial $300 billion in AI-specific revenue."
The Competitive AI Market Landscape
Nvidia isn't the only player in this burgeoning market. Other companies like Advanced Micro Devices (NASDAQ: AMD) are expected to capture about 5% of the AI server share by 2027. Furthermore, Mizuho analysts underscored other major players like Amazon’s AWS Inferentia, Tesla’s Dojo, or Alphabet’s Google, all of whom could capture significant AI market share gains. According to the analysts, "We see more room to unlock value with solid AI roadmaps accelerating."
The Rally of Nvidia's Stock Value
Despite Nvidia's (NASDAQ: NVDA) stock's strong YTD performance, Mizuho anticipates more growth. "Assuming $30-100 billion AI revenues (or approximately $65 billion at the midpoint), we estimate that the implied share price to reflect AI estimates for 2023-2025 would range from $490-$769/share, with a midpoint at about $625," the analysts concluded. The suggested $769/share price would mean Nvidia’s market cap standing at an astounding ~$1.9 trillion. Currently, Mizuho's price target on Nvidia stock sits at $530 per share.
