Even their highest price target, $1,000, is just a 23% gain from here. Right now, all but one of the 27 analysts following Nvidia are saying buy it, even though their price target is 3% below its current price. Any catalyst from acquiring Arm, whose purchase has yet to be approved by regulators, is in the shares. This is a good time for investors to hedge their bets. Revenue continues to grow annually, but the market is assuming the Arm purchase puts Nvidia sales into overdrive. This is true even if a quarter of the sales revenue hits the net income line. A market cap of $508 billion on sales of under $20 billion is preposterous. Chinese crypto-miners are now selling their gear since China banned them. How long they can it do this is a question.

Prices for Nvidia gaming cards continue to defy gravity. Both TSMC and Intel are now building huge new plants in Arizona to alleviate it.īut even this cloud has a silver lining. The only problem with this is that chip capacity is currently constrained, with the industry dependent on China. For Arm, which is based in England, the deal has been better than going public on its own.

The market’s assumption is that this squeeze on Intel will continue, and even accelerate, once Nvidia owns Arm. Businesses operating in the cloud can bypass Intel by licensing the Arm designs, tweaking them to their advantage, and having TSMC make them. Apple (NASDAQ: AAPL) is just one of the companies that has standardized on them. Arm designs have been winning market share from Intel’s x86 for years. But what really has investors rushing to name their dogs for it is its pending purchase of Arm from SoftBank (OTCMKTS: SFTBY).

It has achieved this by focusing on graphics, first for gaming consoles, then for Bitcoin mining, and now for data centers. The value of hardware lies in software, and Nvidia has the best software. Intel, by contrast, is still trying to master the 10 nm process. It makes chips with lines 7 nm apart and has a road map to reach 2 nm. TSMC, as it’s known, has been crushing Intel on manufacturing technology.

Nvidia’s rise is tied to the success of its manufacturing partner, Taiwan Semiconductor (NYSE: TSM). As a fabricator, Intel gets its drawbacks. As a designer, Nvidia gets the benefits of Moore’s law. Moore’s second law holds that they get more expensive to fabricate along the way. Moore’s law holds that chips grow more efficient over time.

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