Gene Munster of Deepwater Asset Management downplays near-term M&A involving NVIDIA Corp (NASDAQ:NVDA) while highlighting a broader push toward vertically integrated AI platforms.
• NVIDIA stock is gaining positive traction. Why are NVDA shares climbing?
Nvidia-Dell Deal Unlikely
Munster on CNBC’s “Fast Money'” on Tuesday said a potential acquisition of Dell Technologies Inc (NYSE:DELL) by Nvidia does not make sense right now, citing a sharp margin gap: Nvidia at 60% operating margins versus Dell at 7%, which would complicate investor messaging.
He adds that Nvidia is already navigating its existing margin opportunity and is unlikely to pursue such a deal in the near term.
AI Integration Theme Still Intact
Munster explains the speculation gained traction due to the idea of building an end-to-end AI powerhouse combining hardware, software and services. He notes that no company has fully achieved this model yet, but sees vertical integration as a major long-term opportunity, especially as the AI market remains in its early stages.
Alternative M&A Paths, But Low Probability
Munster suggests companies like Advanced Micro Devices, Inc (NASDAQ:AMD) or Intel Corp (NASDAQ:INTC) could explore acquiring firms such as Dell as part of a turnaround strategy. However, he puts the probability of such deals at below 50%. He also notes Nvidia plans to invest around $80 billion in the coming years, and adding another large acquisition on top of that would likely not be well received by investors.
NVDA Price Action: Nvidia shares were up 2.59% at $194.22 and Dell Technologies shares were down 3.21% at $183.70 at the time of publication on Tuesday, according to Benzinga Pro data.
Photo: Shutterstock