LIVE MARKETS-Jefferies says AI demand remains strong, with Nvidia at the center

Jefferies came away from two days of meetings across the AI supply chain even more bullish on demand, with Nvidia remaining at the center of the story.

According to analysts at the investment bank, in a semiconductor research note dated Thursday, a recurring theme was that concerns about slower AI model releases may be missing the bigger picture. Companies drew a distinction between training the next frontier model and scaling inference for existing ones. AI labs still appear highly focused on deploying and monetizing current models, while new requirements around AI safety and monitoring could create another layer of compute demand.

For Nvidia NVDA.O, the message was clear: demand remains extremely strong. Management said supply is still being allocated, with customer commitments stretching up to three years. Memory, chip-on-wafer-on-substrate (CoWoS) packaging, wafers, substrates and optics remain key bottlenecks, underscoring how tight the market remains. Nvidia also said the data center projects supporting its roughly 70% growth outlook next year have already been vetted, while power availability is becoming less of a constraint.

The company also sounded confident about its competitive position despite growing interest in custom AI chips. Management argued that Nvidia continues to hold a performance edge and noted that about half of revenue comes from customers outside the hyperscalers, where its moat is particularly strong. It also highlighted opportunities around NVLink Fusion and next-generation networking architectures.

Elsewhere, commentary across the ecosystem reinforced the same theme. Broadcom AVGO.O described aggressive demand for leading-edge AI chips, Applied Materials AMAT.O pointed to strong High Bandwidth Memory (HBM) and advanced packaging spending, and optics suppliers highlighted a healthy ramp in 1.6T networking products.

Overall, the meetings suggested AI infrastructure spending remains robust, that demand signals from major AI customers are still aggressive, and that Nvidia remains one of the industry's best-positioned beneficiaries.