NVIDIA Just Made Two Moves That Could Push Its Stock to the Next Level

Nvidia recently made two key strategic moves that are both aggressive and defensive, positioning the company favorably in the eyes of its shareholders. The first move involved the unveiling of a new 72-billion-parameter large language model (NVLM), while the second was a strategic partnership with Accenture, focusing on AI consulting and services. Both actions showcase Nvidia’s intent to maintain its dominance in the AI space while broadening its influence.

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Nvidia holds a unique position in the tech industry, particularly due to its remarkable growth and dominant market share in data-center GPUs and AI systems. Currently, Nvidia controls approximately 90% of the market in this space, making it a target for competitors eager to carve out their share. Rival chipmakers, as well as companies like OpenAI, Anthropic, and Meta Platforms, are all vying for a slice of the AI landscape that Nvidia currently dominates.

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However, some of Nvidia’s largest original-equipment manufacturers (OEMs) are realizing that reselling Nvidia’s products may not be as profitable for them as it is for Nvidia. This creates a complex environment where cloud providers, OEMs, and independent software vendors must consider their long-term strategies. As these companies evaluate their futures, Nvidia faces the dual challenge of defending its market share while continuing to deliver impressive revenue growth.

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Nvidia’s latest open-source AI model, NVLM, is designed to compete directly with proprietary models from industry leaders like OpenAI and Alphabet’s Google. NVLM is a key addition to Nvidia’s comprehensive “AI full stack” and is meant to strengthen the company’s competitive edge. This model represents Nvidia’s formal entry into the open-source large language model (LLM) arena, putting it in direct competition with Meta’s LLaMA and possibly Anthropic, OpenAI, and other major players in the AI industry.

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What sets Nvidia apart is its commitment to transparency in AI model development. Unlike some companies that keep their models shrouded in secrecy, Nvidia plans to make the weights and training code of NVLM available to the public. This open approach is likely to earn positive feedback from enterprise customers, especially given the current focus on AI safety and the growing demand for transparency in AI technologies.

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The market has been enthusiastic about Meta’s progress with its LLaMA model, but Nvidia’s entry into the space is generating excitement as well. Early performance metrics suggest that NVLM can compete with LLaMA 405 in several areas, and its language capabilities are reportedly comparable to those of GPT-4. This development raises important questions for OpenAI, especially after its recent $6.6 billion funding round that pushed its valuation to an astonishing $157 billion.

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As Nvidia challenges industry giants like OpenAI, Meta, and Google, it signals that the AI race is far from settled. Nvidia’s entry into the open-source LLM space not only enhances its competitive position but also broadens its influence in the rapidly evolving AI landscape.

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In addition to its advancements in AI models, Nvidia’s partnership with Accenture is another significant move. This collaboration is a smart strategy for both companies, allowing them to capitalize on the growing demand for AI consulting and implementation services. Accenture’s decision to partner with Nvidia is driven by the need to stay ahead of potential disruption in the consulting industry, as AI continues to reshape the business landscape.

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Several key figures underscore the logic behind this partnership. In 2023, Accenture generated approximately $100 million in revenue from generative AI services. By 2024, that number is expected to skyrocket to $900 million, with bookings exceeding $3 billion. These figures reflect the immense potential of generative AI and highlight the growing importance of AI consulting for enterprises looking to integrate AI into their operations.

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Research from Futurum Intelligence AI Services in 2024 identified competence and capacity as the top two challenges for enterprises implementing AI. As more companies seek out AI systems integrators and consultants, Accenture is well-positioned to capture this demand. The number of multimillion-dollar proof-of-concepts (POCs) for generative AI is expected to triple this year, further emphasizing the growing interest in large-scale AI implementations.

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One of the key considerations for companies adopting AI is time-to-value — the time it takes for an AI investment to deliver measurable returns. As AI technology continues to evolve at an unprecedented pace, companies need IT and consulting resources that can keep up with this rapid development. Accenture’s investment in Nvidia and its work with AI technologies should position the company as a leader in helping enterprises implement AI at scale.

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While Accenture benefits from this partnership, Nvidia also stands to gain as demand for its AI chips and cloud-based AI infrastructure continues to grow. Nvidia’s digital moat — its competitive advantage in AI technology — is becoming increasingly fortified. With the rising demand for AI hardware and software, Nvidia’s market share is poised to expand even further, much to the satisfaction of its shareholders.

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In summary, Nvidia’s recent moves — launching the NVLM model and forming a strategic partnership with Accenture — highlight the company’s commitment to staying ahead in the AI industry. By embracing both open-source AI and strategic partnerships, Nvidia is ensuring its long-term success in a highly competitive market. As the demand for AI solutions continues to surge, Nvidia’s position as a leader in the field remains strong, much to the benefit of its investors.

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