In a note to clients on Wednesday, Lynx Equity Strategies expressed concern about the potential shift in dynamics of the Nvidia (NASDAQ:) GPU market from scarcity to surplus.
As TSMC aggressively expands CoWoS capabilities, rapid growth in GPU shipments has Lynx wondering when current limitations might turn into excesses.
The firm notes that recent supply chain reports indicate shorter delivery times for Nvidia H100 GPUs. While companies like Amazon AWS are reporting supply shortages, Microsoft’s recent earnings report did not reveal any supply issues in the near future.
Additionally, they explain that prices for using Nvidia servers are being reduced on both a per-hour and per-token basis. Despite this, prices for Nvidia-based OpenAI APIs remain significantly higher than Google’s TPU-based APIs, suggesting that Nvidia may need to further ramp up shipments to remain competitive.
With the upcoming release of the B100 GPU, Lynx expects there may soon be concerns about oversupply. They highlight that the market may begin to worry about potential oversupply as growth approaches. While Lynx remains supportive of Nvidia in the short term, especially given potential catalysts such as Apple’s (NASDAQ:) WWDC, they warn that the stock could face challenges post-event if the semiconductor sector stalls.
Lynx suggests that Nvidia’s long-term future lies not in supplying commercial chips, but in designing and maintaining custom data centers for specialized industrial applications. However, this transition is expected to take at least a year. At the same time, investors should consider the rise in GPU shipments and competitive pressure from alternatives such as Google’s TPU.