Nvidia Remains King as AI Revolution Enters Third Inning

Dan Ives, partner and senior managing director at Yorkville Ives, believes that the artificial intelligence (AI) revolution is still in its early stages. He compares it to the third inning of a baseball game, suggesting that investors should not get too caught up in hype.

Ives points out that Nvidia remains at the center of the AI boom, with its processors being the key technology driving the industry forward. He also highlights companies like CoreWeave and Cisco as 'pieces of the puzzle' for the AI trade. These companies are building data centers around Nvidia's graphics processing units (GPUs) and custom infrastructure.

The AI story has shifted from capital expenditures on chips to a monetization phase, with companies starting to charge customers for AI products that sit on top of those GPUs. This is evident in Microsoft's Copilot seats, Meta's AI agents for businesses, and Palantir's AIP deployments. Each of these needs touches multiple public names.

Ives likens every $1 of Nvidia spend to turning into $8 to $10 of total spend across storage, networking, cloud platforms, and software. This multiplier shows why the trade has legs. AI infrastructure budgets are not one and done; once a company builds an AI factory, it has to run it, connect it, secure it, and feed it with data.