Welcome to Extreme Investor Network! Today, we are diving into the world of investing in Nvidia and its potential acquisitions in the data center space. According to Susquehanna Financial Group analyst Christopher Rolland, Nvidia may need to broaden its horizons outside of artificial intelligence to acquire key data center-related technologies.
Rolland points out that Nvidia has “two glaring holes” in optical and analog networking that could benefit from strategic acquisitions. As Nvidia seeks to solidify its position in systems and networking, Rolland believes the company may look to insource or acquire companies specializing in optical and analog interconnect technologies to meet the growing demands of GPU clusters in data centers.
Optical technologies play a crucial role in data centers by supporting network traffic growth, transmitting optical signals, and providing cost and power savings for high-capacity data transmission. Rolland suggests that Nvidia could consider companies with expertise in linear equalizers, laser drivers, photonic integrated chip technology, and digital signal processors for potential acquisitions.
Potential candidates for Nvidia acquisitions, as identified by Rolland, include optical and photonic products manufacturer Lumentum Holdings, Coherent, and semiconductor producer Marvell Technology. While Lumentum and Coherent have seen significant stock price increases this year, Marvell’s stock has also shown growth.
Rolland remains positive about the outlook for Nvidia, giving the chipmaker a $160 price target and highlighting its competitive advantages in semiconductor design, holistic AI systems, and the CUDA software toolkit. With a 15-year lead in AI enablement tools, libraries, and operating software, Nvidia continues to be a strong player in the tech industry.
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