The melt-up in companies investing “all in” on artificial intelligence continued this week. After Alphabet (GOOG) and Microsoft (MSFT) announced increased capital expenditures for AI-related solutions, Amazon (AMZN) announced a mega deal.
Amazon will get $38 billion from OpenAI to supply Amazon Web Services. AWS will be powered by hundreds of thousands of Nvidia (NVDA) GPUs. In the seven-year deal, OpenAI gets access to AWS. For example, it may access AWS powered by Amazon EC2 UltraServers. OpenAI needs the hardware to support its workload growth.
AMZN stock gained 4.00% while NVDA stock added 2.17% to close at $206.88
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Analysts at Loop Capital set a $350 price target for Nvidia shares. At an $8.5 trillion market cap target, that is more than double its current market capitalization.
Watch Palantir
In after-hours trade, Palantir (PLTR) barely moved after posting third-quarter results. The firm reported Q3 non-GAAP EPS of $0.21. Revenue grew by 62.6% Y/Y to $1.18 billion. The firm closed 204 deals in the quarter worth at least $1 million. 53 deals had a size of at least $10 million.
Risks
PLTR stock commanded a market capitalization of $491.50 billion. It guided sales of $4.4 billion, setting a price-to-sales ratio of 111 times. Investors should be aware of its stretched valuations. Still, the well-connected firm will continue to win military defense contracts. Expect Palantir’s revenue growth to sustain at the current rate for the next several quarters.
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