Citi lists key takeaways for chip sector from Nvidia's AI day
Investing.com -- During the much-anticipated keynote at the GPU Technology Conference (GTC), Nvidia (NASDAQ:NVDA) CEO Jen-Hsun Huang announced a slate of upcoming product launches, including the next-generation graphics architectures: Blackwell Ultra and Vera Rubin.
In a Thursday note to clients, a Citi analyst has parsed the announcements, focusing on how Nvidia's announcements could affect other players in the chip sector.
The introduction of Nvidia's Future Rubin GPU, which boasts 50% more High Bandwidth (NASDAQ:BAND) Memory (HBM) DRAM than the current Blackwell generation, is seen as a positive development for memory AI chipmaker Micron Technology (NASDAQ:MU).
'The new Rubin chip will contain 288GB of HBM4 DRAM, 50% more content compared to the current Blackwell generation,' Citi analyst Christopher Danely said in a note. 'We believe this is good news for Micron as we believe Micron's HBM gross margins is roughly 70%.'
TrendForce, an independent research firm, has revised its Q2 2025 DRAM price forecast from a 0% quarter-over-quarter change to an increase of 3%-8%. This adjustment is based on improved inventory dynamics, which Danely views as further good news for Micron, reinforcing the expectation of improved pricing starting in the second quarter of 2025.
Nvidia also announced its co-packaged optics (CPO) technology, a next-generation networking solution. However, Danely does not anticipate this will impact Broadcom (NASDAQ:AVGO), a leader in the networking segment, as the company had already launched similar technology in March 2024, and Nvidia's CPO is not expected to be available until the second half of 2026.
What's more, Broadcom is expected to continue benefiting from the industry's diversification away from Nvidia, the analyst said.
With hyperscalers increasingly developing their custom accelerator chips to optimize total cost of ownership and reduce dependence on Nvidia, Broadcom's custom ASICs, which are significantly more cost-effective per application, are expected to capture around 25% revenue share of the $380 billion AI accelerator total addressable market (TAM) by 2028, with GPUs accounting for the remaining 75%.
Danely also notes that Nvidia's advancements in the data center market could have a mildly negative impact on traditional server providers like Intel (NASDAQ:INTC) and Advanced Micro Devices (NASDAQ:AMD).
'Nvidia stated that enterprises will need to update their hardware and they are 50% of the world's data center capex,' he noted. 'We continue to believe that more of the data center market will shift towards Nvidia and accelerated computing. We believe this is a mild negative for traditional server providers such as AMD and INTC."
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