NVIDIA may need to look outside its artificial intelligence empire to acquire key data center technology, according to Susquehanna Financial Group. Analyst Christopher Rolland said Nvidia has “two obvious holes” for potential acquisitions in optical and analog networking. “As NVIDIA seeks to further solidify its lead in both systems and networking, NVIDIA may increasingly consider outsourcing or acquiring optical and/or analog interconnect technologies, companies, or divisions. We believe there is,” Roland said in a note to clients Thursday. “As GPU clusters scale linearly, the need for interconnection increases exponentially.” Optical technology in data centers includes the ability to support increased network traffic, send and receive optical signals in data centers, It serves a variety of purposes, including providing cost and power savings while facilitating high-capacity data transmission. Given the increasing cost and importance of these technologies, analysts believe that NVIDIA is an in-house company with key products in areas such as linear equalizers, laser drivers, photonic integrated chip technology, and digital signal processors, among others. We expect that the company will consider becoming a subsidiary or acquiring the company. Lumentum Holdings, a maker of optical and photonic products, Coherent, a maker of engineered materials and optoelectronic components, and Marvell Technology, a semiconductor maker, are among several companies Roland has named as potential candidates for the Nvidia acquisition. Included. To be sure, chipmakers have not said they are actively considering acquiring these companies. Lumentum’s stock is up about 16.3% this year, while Coherent’s stock is up more than 108% amid the AI excitement, which has led to a surge in demand for optical receivers and related technologies. Meanwhile, Marvel is up 18% since the beginning of the year. According to FactSet, analysts’ average price targets suggest there is potential downside for Lumentum and Coherent, given recent share price gains. However, Marvell’s consensus target suggests the stock could rise about 30%. Rowland maintains a positive rating on Nvidia stock with a price target of $160, which is higher than the average of analysts surveyed by FactSet and more than 29% for the chip darling. This suggests that there is room for growth. He remains bullish on NVIDIA’s competitive advantages in semiconductor design, comprehensive AI systems, and CUDA software toolkits, which he said will give the company a 15-year lead in AI-enabling tools, libraries, and operating software.
Nvidia is missing a key technology and will make a deal to acquire it, Susquehanna analyst says
By NvidiaDaily
