Nvidia
‘s
share
price
has
been
volatile
over
the
last
month
amid
some
concerns
over
future
demand
for
AI
chips,
and
the
pace
at
which
artificial
intelligence
will
become
widely
adopted.
The
stock
has
more
than
doubled
this
year
as
the
company
logged
high
double-digit
net
profit
growth
in
the
first
two
quarters
of
this
year,
but
its
shares
fell
13%
over
three
trading
days
last
month,
before
bouncing
back.
NVDA
1Y
line
Large
cloud
computing
firms,
such
as
Microsoft
,
Amazon
and
Google
,
have
bought
billions
of
dollars
worth
of
AI
chips
from
Nvidia
over
the
past
two
years.
Investors
now
want
to
know
whether
these
Big
Tech
giants
will
be
able
to
make
a
return
on
their
investment
—
a
precursor
for
further
spending
on
AI
chips.
“There’s
still
questions
about
demand.
Where
is
the
profitability
of
the
[companies]
spending
all
of
this
money?
How
are
they
going
to
keep
doing
that?
How
is
that
going
to
accelerate
in
the
years
to
come?”
Raj
Shant,
managing
director
at
Jennison
Associates,
one
of
the
top
10
shareholders
of
Nvidia,
said
on
CNBC’s
“Street
Signs
Europe”
Monday.
However,
history
shows
that
major
technological
developments
tend
to
take
longer
than
expected
to
improve
productivity.
The
impact
of
railways,
for
example,
first
introduced
in
Britain,
took
around
70
years
to
be
seen
in
productivity
data,
according
to
Capital
Economics.
However,
the
lags
for
technologies
invented
since
then
have
shortened.
“Nvidia
investors
are
part
of
a
long
tradition
of
attempting
to
capture
the
benefits
of
new
technologies
ahead
of
them
fully
materialising
in
the
real
economy,”
Capital
Economics’
Chief
Economist
Neil
Shearing
said
in
a
note
to
clients
on
July
1.
“This
was
true
during
the
‘Railway
Mania’
of
the
late
19th
century,
and
more
recently
during
the
dotcom
boom
at
the
end
of
the
last
century.”
However,
“tentative”
signs
have
started
to
emerge
that
spending
on
AI
chips
may
be
spurring
investment
in
the
broader
economy,
Capital
Economics
said.
Economists
at
the
consultancy
believe
productivity
improvements
seen
over
the
past
two
quarters
in
the
U.S.
economy
can
be
partly
attributed
to
“investment
in
software
rather
than
hardware.”
Yet
they
caution
that
much
of
the
productivity
gains
won’t
be
felt
until
the
end
of
this
decade.
“We
remain
of
the
view
that
the
boost
to
productivity
from
AI
will
be
substantial
…
but
that
this
boost
won’t
arrive
until
the
second
half
of
this
decade,”
Shearing
added.
CGI
Inc
For
clues
as
to
how
quickly
AI
technologies
are
being
adopted,
Scotiabank
highlighted
CGI
,
a
Canadian
multinational
IT
firm
that
helps
companies
introduce
AI
into
their
business
models
and
operations.
CGI
shares
are
traded
in
the
U.S.
and
Canada.
Last
year,
CGI
revealed
plans
to
invest
$1
billion
over
three
years
to
expand
its
AI
capabilities. But
Scotiabank
analyst
Divya
Goyal
highlighted
a
“slower
than
anticipated
adoption
of
the
technology”
among
its
customers.
Many
businesses
are
still
in
the
“discovery
phase”
phase
of
the
AI
trend,
Goyal
said,
which
involves
producing
proof-of-concept
applications,
while
others
are
waiting
for
AI
software
to
gain
maturity
before
implementing
them.
According
to
the
analyst,
many
companies
are
looking
to
transition
to
a
viable
AI-powered
service
in
the
next
6
to
24
months.
GIB
5Y
line
“As
per
the
CGI
team,
while
~80%
of
the
clients
are
currently
exploring
[generative]
AI,
less
than
10%
are
in
implementation
stage
with
limited
dollars
currently
being
allocated
for
such
Gen
AI
deployments,”
Goyal
said.
The
Scotiabank
analyst
believes
that
as
large
companies
prepare
to
start
AI
spending,
CGI
is
set
to
benefit
and
capture
any
future
growth.
“We
believe
CGI
is
well-positioned
to
cater
to
the
growing
demand
for
AI
engagements
across
its
global
clientele,”
Goyal
said.
Scotiabank
expects
CGI
shares
to
rise
17%
from
the
current
share
price
of
136.55
Canadian
dollars
($99.62)
for
Toronoto-listed
stock,
and
$99
for
New
York-listed
stock.