On substitutes for Nvidia Corp., Wall Street is always debating One analyst just mentioned a well-known name that is not usually discussed.
D.A. Davidson analyst Gil Luria says Alphabet Inc. (GOOGL) (GOOG) silently has the “most compelling alternative to Nvidia GPUs.” Tensor processing units, Alphabet’s version of accelerators capable of handling machine-learning chores, are produced by the business. Apple (AAPL) selecting these “are a viable, and maybe even superior, alternative to Nvidia GPUs (as evidenced by Apple),” Luria noted.
Luria praises Alphabet’s semiconductor technology highly, but given his neutral rating he really has a contrarian opinion of the stock. And his most recent message included some harsh words for the business, which he saw as squandering potential in the projected $4 trillion hardware industry.
Luria said Friday, “does not appear to be aggressive enough pursuing the opportunity.” Alphabet “has historically made it difficult for external developers to access and effectively utilize TPUs, so creating a bottleneck that limits their commercial viability.”
By contrast, Nvidia (NVDA) boasts a “robust” developer ecosystem, he said.
Alphabet did not immediately send back a BourseView. Luria tossed some more large statistics beyond his mention of a $4 trillion hardware industry potential. By his estimations, Alphabet’s TPU business combined with its Google DeepMind artificial-intelligence company may be worth $700 billion on a sum-of- the-parts basis.
From context, Advanced Micro Devices Inc. (AMD), a rival Nvidia that produces GPUs without an in-house DeepMind equivalent, is valued at $200 billion. Nvidia’s value alone comes to $3.5 trillion.
According to Luria, Alphabet’s TPU business is not only hampered by the development strategy but also by other factors. To fully appreciate the worth of its several ecosystems, the corporation should also take consideration a breakup, he advised.
Luria’s sum-of- the-parts approach values the business $3.5 trillion. Based on the model, YouTube could be worth $300 billion and Google Cloud could be valued approximately $700 billion beyond the total value for Alphabet’s TPUs and DeepMind businesses. Search and networking have a worth of $1.3 trillion.)
However, if investors are not looking at the company that way, a sum-of- the-parts valuation strategy loses some validity. “We are waiting for the company to indicate it is willing to release some of the SOTP value to shareholders,” Luria penned.
On Alphabet’s stock, his price goal is $200, about where the stock trades now. Right now the company’s valuation is $2.46 trillion.
Apple’s “decidedly unattractive” perspective generates unusual bearish call on the stock.
