On April 12th, China told tech giants in the country to phase out foreign chips that are critical to their networks, prolonging the chip war that’s currently ongoing between the country and its main rival, the United States. This led American computing and software companies to shift their focus to Japan, reinforcing a longstanding partnership that is accelerating the recovery of Japan’s technological competitiveness.
One of these companies is Nvidia (NASDAQ: NVDA), which has recently announced new projects and partnerships in Japan, saying that it welcomed Japan’s participation in AI and quantum computing development projects. This unlocks new endeavors for Nvidia’s business and NVDA stock, after it suffered a drawback recently due to multiple reasons, and one of them is China banning such foreign chips.
Nvidia’s Collaboration with AIST
According to recent reports, Nvidia will help Japan build a hybrid supercomputer that offers quantum computing capability for use by researchers and companies. This new supercomputer will be called ABCI-Q, and it will be built by Japan’s National Institute of Advanced Industrial Science and Technology (AIST). Nvidia is already supplying GPUs to the ABCI-Q, but the most recent reports say that it will additionally start supplying quantum computing software via a cloud service.
The ABCI-Q is expected to be integrated with quantum hardware in the future. It will feature more than 2,000 H100 GPUs on more than 500 nodes interconnected with the Quantum-2 InfiniBand architecture. The supercomputer will also integrate CUDA-Q, which is the company’s impressive hybrid quantum computing platform, to enable hybrid programming using two systems: quantum and classical computing.
This quantum computer will be very useful because it can solve calculations that are too complicated for conventional computers. It will enable researchers to input a problem and get a computer-generated answer through the cloud system. Nonetheless, it won’t just benefit the Japanese government, but the country’s whole quantum computing sector, as the system will be available to the private sector to rent as early as fiscal 2025.
Additionally, ABCI-Q envisions numerous applications like pharmaceutical research and logistics optimization, and as an example of the logistics optimization, Nikkei Asia reported that the new supercomputer will make it possible for logistics companies to determine the shortest routes with the lowest CO2 emissions for trucks with maximum loads that make multiple stops.
SoftBank & Nvidia
It was also recently reported that SoftBank (OTCMKTS: SOBKY) is spending 150 billion yen, which amounts to $960 million, on Nvidia chips by 2025 to give its computing facilities the crunching power needed to develop world-class generative AI. When the investment is completed, SoftBank’s computing power is likely to be among the highest in Japan, as the company tries to develop a Japanese-language-specific generative AI.
The GPUs that SoftBank will buy from Nvidia will not only be used for SoftBank’s own development of generative AI, but will also be loaned to other companies, which opens up more opportunities for Nvidia’s expansion in Japan.
Sakura Internet’s Cloud Services Supported by Nvidia
In addition to the two deals mentioned above, Nvidia entered into a partnership with another Japanese partner. On April 19th, the Japanese digital infrastructure service provider, Sakura Internet, which is backed by the Japanese government, announced that it is aiming to enhance its cloud services for generative AI. To do this, Sakura Internet has secured around 20 billion yen, which is roughly $130 million, worth of Nvidia’s next-generation B200 chips as part of its investment to strengthen domestic AI computing power.
One of the Sakura executives told Nikkei Asia in a previous interview that it was not easy to secure that much volume of the popular semiconductor chips, but the negotiations were able to proceed with the backing of the Japanese government. The announcement came a month after Nvidia announced that it will ship B200 chips by the end of the year and amid a push by Tokyo to boost development of Japan-made AI. Moreover, the company mentioned that it will make additional investments, both in AI computing power and data centers totaling $646 million by March 2031, which could result in more deals between Sakura and Nvidia in the future.
The Japanese government is very keen on developing Japan-made AI, which is why the Japanese ministry of economy, trade and industry announced that in order to establish the necessary supercomputers for developing generative AI domestically, they will provide a maximum subsidy of 72.5 billion yen to five Japanese companies, with Sakura receiving a maximum subsidy of 50.1 billion yen.
This government support unlocks new means for Japanese companies, including Sakura, to enhance their domestic generative AI developments. In addition, it could mean that Nvidia will benefit as well from the other four Japanese companies if they see positive results from its partnership with Sakura.
NVDA Stock Forecast
Nvidia is still the market leader in AI chips, which is why Wall Street Analysts are still bullish on the company despite the recent drawback. 55 Wall Street analysts who shared their ratings for the NVDA stock in the past 90 days, with 40 analysts suggesting a strong buy rating and with only 10 analysts suggesting a buy rating. Meanwhile, only 5 analysts suggest holding the stock currently, and zero analysts suggest selling the stock. Nvidia has always been a great company, and the recent downturn in its stock price didn’t really have anything to do with the company itself, but with market events.
In addition, we have seen the deals Nvidia has been doing with the Japanese government, which would definitely unlock more and more opportunities in the future. At the time of this article, Nvidia stock is at $824.23, which is a significant bump after the stock fell 10% last week to reach $762 on Friday, marking the company’s large stock decline on record.
It’s inevitable that Nvidia stock will rebound thanks to the new major deals it keeps acquiring, and the expected release of the company’s new Blackwell GPUs, which are already seeing massive demand. We’ve seen analysts who mentioned that this is a stock that could go above $1,000, so investors should keep holding the stock and weather out the current market fluctuations if they want to win big with NVDA stock.
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