By Sam Boughedda
With the buzz of ChatGPT and other AI chatbots, analysts have speculated that it could benefit Nvidia (NASDAQ:NVDA), and while Morgan Stanley analysts agree, they said in a research note that several reports have incorrectly characterized the direct opportunity for the company "in particular the revenue from Chat GPT inference."
Nvidia shares are down more than 5% so far on Friday.
"We think that GPT 5 is currently being trained on 25k GPUs - $225 mm or so of NVIDIA hardware - and the inference costs are likely much lower than some of the numbers we have seen," wrote the analysts. " Further, reducing inference costs will be critical in resolving the 'cost of search' debate from cloud titans."
The analysts have an Equal-Weight rating and a $175 price target on Nvidia. However, they did state that deep learning for natural language was part of the firm's Nvidia upgrade in 2018 "as deep learning activity was growing beyond vision applications into large language transformers."
Elsewhere, Jefferies analysts raised the firm's price target on Nvidia to 275 $225, maintaining a Buy rating on the stock.
The analysts state that they raised their price target on the stock following their expert call with a ChatGPT and AI systems expert. They have increased confidence in Nvidia's AI ecosystem (software and hardware) leadership, and view it as the "biggest beneficiary of the shift in focus of cloud CapEx toward AI in 2023."