Economy

To better understand the stock market enthusiasm for these technologies, Cimon Plante, portfolio manager and senior wealth management advisor at National Bank, answers questions from Gérald Fillion on the show Economy zone.

Gérald Fillion (G.F.) In 2020, Nvidia generated US$11 billion in revenue for the full year. Now the company generates this amount in a single quarter. What explains this exceptional growth?

Cimon Plante (CP) For 40 years, we had great moments [en matière de nouvelles technologies]. There was the personal computer, the arrival of the Internet and the smart phone. From there, several applications have been created, such as Airbnb or Uber. Today, generative artificial intelligence is a platform […] which will generate new sectors of activity, and we are just at the beginning of this trend.

G.F. How are microchips essential to the development of artificial intelligence?

C.P. Data processing is meaningful. We need chips, yes, but high-performance chips and that’s what Nvidia makes. This company currently has a competitive advantage because it has the technology and the production capacity. Over the past few months, we have seen the potential of ChatGPT in the linguistics sector. […] and there is a demand. So the question is whether Nvidia’s competitors are going to be able to innovate with product creation. There are some semiconductor manufacturers who are in the running. We hear regarding Alphabet or Meta developing their own processors to compete, but these companies don’t have the same production capacity as Nvidia.

G.F. After the boom video games, the rise of cryptocurrency, virtual reality and the metaverse, and now artificial intelligence… Is Nvidia already a major global technology player?

C.P. Consumers are less familiar with this company, but the trajectory of its business model is definitely adapted for the next few years. I think we’re going to hear more and more regarding Nvidia.

G.F. Should we fear an artificial intelligence bubble?

C.P. Clearly, expectations are high. In different industries, there is often a gap between the conception of an idea and its execution, and there can be disappointments. That’s why I can say that there will probably be issues with regard to Wall Street’s expectations, in relation to the results. […] But I think that, if we are patient, we will see some interesting developments over the next few years.