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NVIDIA (NVDA) and Indosat Collaborate to Build AI Center

NVIDIA Corporation NVDA forged a partnership with Indonesia's telco firm PT Indosat Ooredoo Hutchison to build an artificial intelligence (AI) center in Central Java in 2024, Reuters reported on Thursday citing a statement from Budi Arie Setiadi, the country’s communication minister. The state-of-the-art AI center will be in the Surakarta city of the Central Java province.

The investment plan, which is projected to be around $200 million, aims to strengthen AI innovation and development in the region. The AI center is expected to encompass telecommunication infrastructure and human resource facilities.

NVIDIA Eyeing Southeast Asia for Growth

NVDA is focusing on deepening its business relationship with Southeast Asia nations amid growing tensions between the United States and China. In December 2023, the co-founder and CEO of the United States-based semiconductor company, Jensen Huang, visited three Southeast Asia countries, namely Singapore, Malaysia and Vietnam.

NVIDIA Corporation Price and Consensus


NVIDIA Corporation Price and Consensus
NVIDIA Corporation Price and Consensus

NVIDIA Corporation price-consensus-chart | NVIDIA Corporation Quote


During his visit to these nations, Huang stated that Southeast Asia could be an important technology location. Considering the region’s expertise in packaging, assembling and battery manufacturing, he believes that it can play a major role in the semiconductor supply chain.

NVIDIA signed an AI infrastructure deal with the Malaysian conglomerate YTL’s subsidiary, YTL Power International, during his trip to Malaysia. Per the agreement, the two companies will work together on building AI capabilities at YTL’s data center complex in Kulai, Johor. The first phase of the project is anticipated to be operational starting mid-2024. The deal is expected to be worth $4.3 billion.

In Vietnam, NVIDIA’s CEO has shown interest in deepening business ties with top Vietnamese tech firms and is also looking forward to setting a second base for the company in the country. Huang also intends to support Vietnam in training the workforce to develop AI and digital infrastructure.

The company has already invested $250 million in Vietnam through partnering with the country’s top tech companies. These collaborations focus on deploying AI across multiple industries, including cloud services, healthcare and automotive.

NVIDIA in Track to Diversify Its Market Presence

The U.S. chipmaker has been caught in the crossfire of the United States-China tech war. Over the past two years, the U.S. government has restricted NVIDIA from selling its several advanced AI chips to China in a bid to restrict the country from getting hands-on cutting-edge technologies that can strengthen its military.

NVIDIA earlier stated that it might be forced to discontinue its business operations from countries on the U.S. government’s export restriction list. The rules are expected to impact NVDA’s ability to support its existing customers and complete the development of certain products in a timely manner. In third-quarter fiscal 2024, the company generated 17% of its total revenues from China (including Hong Kong).

Considering the growing risk of doing business in China amid the tech war, the company is looking to expand its market presence. In this regard, the recent investments in Southeast Asia nations could be seen as its long-term strategic moves to diversify its supply chain and market presence.

Zacks Rank & Other Stocks to Consider

NVIDIA currently sports a Zacks Rank #1 (Strong Buy). The NVDA stock has risen 73.3% in the year-to-date (YTD) period.

Some other top-ranked stocks in the broader technology sector are Meta Platforms META, Zscaler ZS and Twilio TWLO, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today's Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Meta Platforms’ 2024 earnings has been revised 2% upward to $19.94 per share in the past 60 days, which suggests year-over-year growth of 34.1%. The long-term estimated earnings growth rate for the stock stands at 19.5%. The META stock has soared 44.3% YTD.

The Zacks Consensus Estimate for Zscaler’s fiscal 2024 earnings has been revised upward by 2 cents to $2.73 per share in the past 30 days, which calls for an increase of 52.5% on a year-over-year basis. The long-term expected earnings growth rate for the stock is pegged at 28.1%. ZS shares have plunged 17.7% YTD.

The consensus mark for Twilio’s 2024 earnings has been revised upward by 4 cents to $2.64 per share over the past 30 days, which indicates a 7.8% increase from 2023. It has a long-term earnings growth expectation of 19.6%. The TWLO stock has declined 20.8% in the YTD period.

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