Nvidia’s share price has been volatile over the past month amid some concerns over future demand for AI chips and the pace at which artificial intelligence will be widely adopted. The stock has more than doubled this year after the company posted high double-digit net profit growth in the first two quarters of this year, but its shares fell 13% over three trading days last month, before recovering. NVDA 1Y line Big cloud computing firms such as Microsoft, Amazon and Google have bought billions of dollars worth of artificial intelligence chips from Nvidia over the past two years. Investors now want to know whether these Big Tech giants will be able to make a return on their investment — a precursor to further spending on AI chips. “There are still questions about the demand. Where is the profitability of [companies] spending all this money? How will they continue to do this? How will this accelerate in the coming years?” Raj Shant, managing director at Jennison Associates, one of Nvidia’s top 10 shareholders, said Monday on CNBC’s “Road Signs in Europe.” However, history shows that major developments technological trends According to Capital Economics, the impact of railways, for example, first introduced in Britain, took about 70 years to be seen in productivity data. “Nvidia investors are part of a long tradition of trying to capture the benefits of new technologies ahead of them fully materializing in the real economy,” Capital Economics chief economist Neil Shearing said in a note to clients on July 1. “That was true. during the ‘railway craze’ of the late 19th century, and more recently during the dotcom boom at the end of the last century.” However, “evidential” signs are beginning to emerge that spending on AI chips could boost investment in the broader economy, said Economists at the consultancy, that productivity improvements in the US economy over the past two quarters can be attributed in part to “investment in software rather than hardware.” However, they cautioned that many of the productivity gains won’t be felt until the end of this decade. “We remain of the view that the productivity gains from AI will be substantial – but that this growth will not arrive until the second half of this decade, ” added Shearing. CGI Inc For data on how fast AI technologies are being adopted, Scotiabank highlighted CGI, a Canadian multinational IT firm that helps companies introduce AI into their business models and operations. CGI shares are traded in the US and Canada. Last year, CGI unveiled plans to invest $1 billion over three years to expand its AI capabilities. But Scotiabank analyst Divya Goyal highlighted a “slower-than-expected adoption of technology” among her clients. Many businesses are still in the “discovery phase” of the AI trend, Goyal said, which involves producing proof-of-concept applications, while others are waiting for AI software to gain maturity before implementing them. According to the analyst, many companies are looking to move to a sustainable AI-powered service in the next 6 to 24 months. GIB 5Y line “According to the CGI team, while ~80% of customers are currently exploring [generative] AI, less than 10% are in the implementation phase with limited dollars currently being allocated for such AI deployments,” Goyal said. The Scotiabank analyst believes that as large companies prepare to begin AI spending, CGI will leverage and capture any future growth “We believe CGI is well positioned to meet the growing demand for AI engagements across its global clientele,” Goyal said, expecting CGI shares to rise 17% from their current price of per share of C$136.55 ($99.62) listed shares and $99 for New York-listed shares.
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