Nvidia's (NVDA) CEO, Jensen Huang, said the company received the most substantial advancement to its CUDA platform since its release two decades ago. The centerpiece of CUDA 13.1 is CUDA Tile. It is a new tile-based programming model that changes GPU development significantly.
Programmers no longer have to micro-manage thousands of individual tasks. They can now work with "tiles" of data and let CUDA's compiler and runtime automatically determine the best way to distribute workloads. It is available in Python, with plans to release a version compatible with C++ "at some point in the future."
What the Update Means for Nvidia's Lead
The update tightens Nvidia's moat in several critical ways. CUDA is the software layer that gives Nvidia's hardware its real-world punch. You may often hear that AMD (AMD) or Intel (INTC) both have hardware "close" to what Nvidia offers at drastically lower prices.
However, you still don't get to see these "competitive" GPU units fly off shelves like Nvidia's products do. CUDA is why. Other companies cannot fight against the hardware plus software stack that Nvidia offers. And even if they do offer up something similar, customers are not willing to go through the headache to migrate over to another platform.
Nvidia's platform thus controls up to an estimated 95% of the AI-accelerator market. This update only makes Nvidia's moat tougher than ever, as switching becomes much harder once they build their AI stacks with this tile system.
Will It Impact NVDA Stock?
Wall Street generally worries more about the financial statements than the ins and outs of what happens on the desks of developers working with Nvidia's products. That said, NVDA stock can still benefit greatly from this if the update's impact translates over into quarterly statements.
Customer churn is likely to be reduced, and the update introduces another barrier that competitors will have to deal with if they ever want to chip away at Nvidia's dominance.
The update is not as flashy as a new GPU announcement, but it pushes Nvidia further ahead in the AI arms race. Moreover, it makes it harder for bears to argue that Nvidia's older GPUs are rapidly losing value, as these new software updates can make them more efficient.
In short, you're going to see the impact of this update over the long run as fewer customers move out of Nvidia's ecosystem.
Should You Buy NVDA Stock Now?
A software update in and of itself should not make a big difference for Nvidia. Thus, if you've already made up your mind about whether you want to buy Nvidia, this shouldn't change your decision.
It is a big update for sure, but Nvidia has already been dominating. It's another feather in Nvidia's cap and more salt in the wound for competitors.
If you are stuck on whether you should buy NVDA stock at all, it's a good idea to have some exposure if you already don't. The company has been making advancements at breakneck speed, and it's difficult to be bearish when the financial statements show no weakness.
If you already have a lot of exposure to NVDA stock, it may be time to start taking some profit, though. Nvidia accounts for 7.22% of the S&P 500 ($SPX). If you're sitting on some big gains, it would be a safer bet to slowly rotate into more defensive names before the pendulum inevitably turns back.
Analysts are overwhelmingly bullish, with 44 out of the 48 covering NVDA stock giving it a “Strong Buy.”
The average price target is $252.67 (37.7% upside), with the highest price target all the way up to $352. The lone "Sell" rating gives you a $140 price target, which still isn't that bad.
On the date of publication, Omor Ibne Ehsan did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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