The rapid advancement of AI is disrupting entire industries and transforming business models. However, despite its virtual prowess, real-world constraints may hinder its future growth.
Legal questions, regulatory roadblocks, technical challenges, and ethical issues all have the potential to slow down the AI revolution. Another significant obstacle is the massive quantity of energy required to operate the technology.
Running a single data center can strain the power capacity of entire states. This demand comes from both the activation of the AI chips and the cooling systems needed to prevent overheating, each consuming vast amounts of energy.
However, Nvidia (NASDAQ:NVDA) may have addressed at least part of this issue. The chipmaker’s next-generation Blackwell platform could lead to significantly lower energy requirements for AI deployment.
Investor Envision Research, typically cautious with the term ‘gamechanger,’ believes it is perfectly suited for this breakthrough.
“Nvidia claims its Blackwell can achieve up to 25x lower costs for workloads like training massive AI models… translating into a significant reduction in power consumption for a given level of performance,” the investor writes.
This has the potential to significantly lower the cost of running the chips, which the investor explains is actually more expensive than the initial purchase price of acquiring them.
“I expect these improvements to not only help sustain NVDA’s dominant role in this space, but also to make the use of its chips actually sustainable economically,” Envision Research continues.
Better yet for Nvidia, these efficiency improvements are expected to continue in the years ahead. The successor to Blackwell, which will go by the name Rubin and is likely to include additional improvements, is scheduled to come online in 2026.
“I view the 25x energy saving from Blackwell as a game changer, paving the path for widespread deployment of NVDA’s chips. A good pipeline of new products such as the software ecosystem and the Rubin platform help to sustain the growth trajectory,” the investor concludes.
It’s no wonder, then, that Envision Research rates NVDA shares a Buy. (To watch Envision Research’s track record, click here)
This positive outlook aligns with Wall Street’s take. NVDA stock has a Strong Buy consensus rating, supported by 38 Buy recommendations and 3 Holds. The average target price is $135.09, indicating a potential growth of ~9% in the year ahead. (See NVDA stock forecast)
To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a tool that unites all of TipRanks’ equity insights.
Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
