The chief executive at Alphabet (GOOGL), Google’s parent company, just announced that two of its advanced research divisions are merging to build general AI applications. That’s why investors should buy NVIDIA (NVDA) shares into any weakness, recommends Jon Markman, editor at Weiss Ratings Daily.

AI research has never been hotter. OpenAI, the small company behind ChatGPT, is taking the computing world by storm with a next-generation chatbot that appears to behave like a human.

ChatGPT can do everything from writing music, poetry and software code, to carrying out casual conversations about recipes and philosophy. This could be catastrophic to Google’s core business: internet searching.

ChatGPT launched in December and added 1 million active users in its first week. By the end of January, that number swelled to 100 million. For context, this growth, in order of magnitude, is faster than Instagram, TikTok and Google Search, which needed almost one year to reach 100 million users, according to a report from Reuters.

A close-up of a computer chip  Description automatically generated with medium confidenceAlphabet’s CEO Sundar Pichai is rightfully concerned. His plan is to merge Google Brain and DeepMind, its advanced research divisions. While the new subsidiary may lack a creative name, Google DeepMind combines a wealth of real-world AI accomplishments.

In short, AI is a disruptive game-changer. Research from Lambda Labs shows that ChatGPT could have been created in only 34 days at a cost of a mere $5 million.

Analysts at Lambda figure that 355 years would have been required using traditional methods to train LLMs. Developers at OpenAI blew up the norm. 

They used 1,023 A100 graphics processing units scaled into a supercomputer. The NVIDIA GPUs used massively parallel designs to bust through the complex math in short order.

This feat of brute force pushed demand for NVIDIA gear through the roof. Two-year-old A100s are now selling on eBay for up to $45,000 apiece. The retail cost is $10,000, if you can find one.

Nvidia reported in November that Microsoft (MSFT) would acquire “tens of thousands” of these GPUs for its Azure cloud computing subsidiary. And a recent note at Business Insider indicated Elon Musk has purchased 10,000 units to bolster an internal AI project at Twitter.

It’s not hard to see where all this is going. This is an AI gold rush and NVDA is selling the pickaxes and shovels. Investors should buy any pullbacks to the $245 area.

Recommended Action: Buy NVDA on a pullback to $245.

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