Investing Club: A keynote from Nvidia's CEO strengthens our belief in the chip maker's future growth

Published Tue, Mar 22 20225:00 PM EDT

While Nvidia CEO Jensen Huang got super technical in a highly anticipated speech Tuesday, the takeaway for investors was simple: The chip maker continues to push the boundaries of computing power and blur the lines between reality and science fiction. In his keynote at the GTC 2022 developer's conference, Huang introduced new technologies — both hardware and software — and laid out the many ways his company's innovations are accelerating automation. In one example, Huang displayed the process of teaching a digital character to move more naturally, noting that Nvidia was able to cram 10 years of digital character simulations into three days in the real world. New hardware reveals The H100 chip , built on an all-new Hopper architecture, named after computer scientist Grace Hopper, that delivers a huge leap over predecessor Ampere. Notably, this new Hopper architecture leveraged Taiwan Semi's 4-nanometer process, a positive surprise versus expectations for the new introduction to leverage a 5-nanometer process. Built on top of the new H100 chip is the fourth-generation Nvidia DGX system. These DGX H100 systems meet the massive computing requirements of large language models, recommender systems, health-care research and climate science, among other things. We also got a look at a new Grace CPU designed for AI infrastructure and high-performance computing. Also introduced: the Nvidia Link-C2C (chip-to-chip) interconnect , a module that allows GPUs, CPUs, DPUs, NICs and SOCs to be interconnected. For example, the newly announced Grace CPU Superchip is actually two CPUs connected via the NVLink-C2C. Put another way, the Nvidia Link is the glue that brings various hardware products together. New software Nvidia announced over 60 updates to the CUDA-X platform, a parallel computing platform and programming model that allows developers to harness the full power of Nvidia hardware. For autonomous driving, a relatively immaterial portion of revenue today but an area with a monstrous long-term upside, Nvidia announced production of its DRIVE Orin autonomous vehicle computer. Jensen estimated an $11 billion automotive pipeline — up from the $8 billion last April — and unveiled DRIVE Hyperion 9 , which is set to debut in 2026 production vehicles. Note: Hyperion 8 isn't even set to hit production cars in 2024. By combining DRIVE Hyperion with NVIDIA Orin as the central nervous system and AI brain for new EVs, Jensen said the company could continue to add features while still ensuring safety. Lastly on autonomous driving, Huang touched on the DRIVE Map, a map engine that uses a bunch of sensors. According to Huang, DRIVE Map has two engines, one is based on ground truth survey mapping, and the other is a based on crowdsourced fleet mapping. Ultimately, it means that Nvidia can collect more data faster and as a result, expects map will create a digital twin of all major highways in North America, Western Europe, and Asia" by the end of 2024. Moreover, the map will constantly be updated by the data pulled from the millions of Nvidia-equipped passenger traveling on the road. Digital twins The concept of Digital twins was a major theme and you can expect to hear the term come up more and more in the months and years ahead. The example Huang used to portray their importance was Apollo 13. He explained that if not for a fully functional replica on Earth that allowed NASA to trial solutions following an oxygen tank explosion, the mission would have ended in a disaster. Of course, not all things can have physical replicas and a result, digital twins obey the laws of physics and operate exactly as they do in the real world. Huang believes these digital twins to be the internet's next evolution. The omniverse, for example, is all about digital twins and virtual worlds. Developers can create realistic digital twins that obey the laws of physics and allow users to do everything from trialing warehouse operations (in an industrial setting) to modeling extreme weather events . We took a deeper dive into the omniverse here . However, newly announced today was the Omniverse Cloud , a suite of cloud services that gives artists, creators, designers and developers instant access to the Nvidia's omniverse platform for 3D design collaboration and simulation from up to billions of devices. Perhaps most interesting was that during the Omniverse Cloud demonstration, we saw four users editing a scene; one of them, however, was actually an omniverse avatar who was taking commands and making changes in real time. Bottom line There were high expectations coming into today's event and Nvidia did not disappoint. The updates served to increase our conviction that Nvidia lies at the heart of the most exciting and innovative secular growth end markets on the planet. Without Nvidia's hardware and software offerings, many of the other investment focus areas such as cloud, gaming, automation, robotics, professional visualization, the metaverse and any other artificial intelligence applications you can think of simply would not be possible. While the high price-to-earnings multiple may result in limited near-term upside, over the long term we believe that the company's best days lie ahead. With every hardware iteration greatly outperforming the last one — and the recurring revenue software services opportunity growing rapidly, the underlying business fundamentals are stronger than ever. (Jim Cramer's Charitable Trust is long NVDA. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

Nvidia CEO Jensen Huang speaks during Mobile World Congress Americas in Los Angeles on Oct. 21, 2019.

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