Baidu Inc (ADR) (BIDU) Just Blew NVIDIA Corporation (NVDA) Stock Up


NVIDIA Corporation (NASDAQ:NVDA) shares were strongly up before the market opened on Wednesday morning as the firm announced a major partnership with Baidu Inc (ADR) (NYSE:BIDU). The two firms revealed on Wednesday that they were setting up a strategic partnership in order to progress in the field of AI.

That’s become one of the most important fields for tech companies in recent years. The NVIDIA Corporation Baidu Inc (ADR) deal involves a hardware-software mix only seen in the biggest players in the AI field. The press release published this morning said that the AI efforts would focus on three areas: cloud computing, self-driving vehicles and ai home assistants.

NVIDIA moves forward in AI

Right now a huge amount of NVIDIA profit comes from the graphics processing units it makes for home and commercial PCs. As that market’s long term outlook is less than certain, the firm has done its best to try to expand into other markets. Given the promise of AI, and the power in NVIDIA Corporation (NASDAQ:NVDA) GPUs, a move in that direction seemed to be an obvious choice.

NVIDIA Corporation (NVDA)

The exact details of the deal weren’t made fully clear in the press release on Wednesday morning. Baidu Inc (ADR) (NYSE:BIDU) did say that it has picked the Nvidia PX 2 AI supercomputer for its autonomous vehicle platform.

The two firms also made a commitment to optimize the use of the Baidu “paddle paddle” machine learning framework on Nvidia’s volta GPU. From a non-expert point of view it’s very tough to see what kind of dividends either firm could reap from the deal. Even those with good knowledge of AI may be left scratching their heads due to lack of detail.

NVIDIA, Baidu stock jumps up

At time of writing, just before the stock market was set to open, shares in NVIDIA Corporation (NASDAQ:NVDA) were up by 1.64 percent to $141.61.

Baidu Inc (ADR) (NYSE:BIDU) stock was performing even more strongly, set to open at $186.27. That’s 3.5 percent higher than the firm’s closing price on Wednesday.

In recent weeks Nvidia stock has been doing well on the back of increases in the prices of cryptocurrency. Those price increases have made mining, the act of solving computer puzzles in order to earn currency, more profitable. This has increased demand for GPUs across the board, allowing Nvidia to see higher average prices and increases in sales volume.

Some on Wall Street are even confident that the sales boom can continue indefinitely.

Vijay Rakesh of Mizuho securities, says that there is a balance to strike between gaming and crypto mining. “Conservative gaming estimates for 2H17 could see upside as near term cryptocurrency and mining trends are driving GPU shortages and pricing,” he wrote in his latest report.

In his view Nvidia has the most to gain from AI growth of the kind announced on Wednesday. He says that the firm is “starting to see some traction with the new DGX-1, launched at its GTC-2017, as some of the leading edge AI players adopt into 2H17.” His $170 price target is still out there, but this morning’s announcement gives some weight to Mr. Rakesh’s prognostications.

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