Nvidia's AI Dominance Continues with Strong Demand for New Blackwell Chips

2 Massive Reasons to Buy Nvidia Stock Before 2025 | The Motley Fool

The high-flying chipmaker has lost momentum in the past three months, but it could make a solid comeback in 2025. Nvidia (NVDA -0.18%) stock has delivered stunning returns once again in 2024 following a blistering performance last year, but a closer look at the company's price chart will tell us that it has lost momentum over the past three months. Nvidia stock has remained flat during this period because of doubts surrounding the company's artificial intelligence (AI)-related prospects and its ability to continue delivering eye-popping growth. Investors may be wondering if they should be buying more shares of this semiconductor giant or start booking profits. However, it won't be surprising to see Nvidia stock regaining its mojo and delivering another stellar year in 2025. In this article, we will check out a couple of reasons why buying Nvidia stock before 2025 is a no-brainer. Analysts are expecting Nvidia to witness a substantial increase in shipments of its AI graphics processing units (GPUs) in 2025. Market research firm TrendForce believes that Nvidia could witness a 55% increase in shipments of its AI GPUs next year, driven by the arrival of the company's next-generation Blackwell processors. TrendForce estimates that Blackwell will account for 80% of Nvidia's AI GPU shipments next year. This also means that the shipments of Nvidia's older generation Hopper chips will continue to remain solid as well in 2025. The good part is that TrendForce isn't the only one expecting a jump in Nvidia's AI GPU sales next year. Japanese investment bank Mizuho has raised its estimate for Nvidia's 2025 AI GPU shipments by 8% to 10% as compared to its prior estimate issued in July this year. Mizuho credits this upward revision to an improvement in the company's supply chain. More specifically, Nvidia's foundry partner Taiwan Semiconductor Manufacturing (popularly known as TSMC) is reportedly going to double its advanced packaging capacity, which will allow the former to manufacture more AI GPUs. Moreover, TSMC plans to continue increasing its advanced packaging capacity beyond next year as well. The foundry giant believes that it will be able to clock an annual growth rate of at least 60% in its chip-on-wafer-on-substrate (CoWoS) packaging capacity through 2026. This should place Nvidia in a nice position to capitalize on the fast-growing demand for AI chips. Allied Market Research estimates that sales of AI chips could increase at an annual rate of 38% through 2032, generating $384 billion in annual revenue. Nvidia is the dominant player in the AI chip market with a market share that's estimated between 70% and 95%, though a closer look at its AI revenue as compared to that of its rivals will indicate that its share is likely at the higher end of that range. More importantly, TSMC's improving production profile should ensure that Nvidia maintains its dominance in the AI chip market. So, higher sales of AI GPUs should translate into solid growth for Nvidia in the next fiscal year, while its pricing power in this market would lead to healthy growth in its bottom line as well. Some might point out that Nvidia is richly valued right now with a trailing price-to-earnings ratio (P/E) of 58, which is higher than the Nasdaq-100 index's average earnings multiple of 32. But at the same time, Nvidia has been able to justify its valuation with outstanding growth. In fact, Nvidia's earnings multiple is currently lower than its five-year average P/E of 72. Also, Nvidia's price/earnings-to-growth ratio (PEG ratio) of just 0.14 means that the stock is very much undervalued considering the growth that it is forecasted to deliver. The PEG ratio is a valuation metric that takes into account the potential earnings growth that a company could deliver. A reading of less than 1 means that the said stock is undervalued. That's why now would be a good time for investors to load up on Nvidia stock before the potential jump in sales of the company's AI chips in 2025 sends it soaring.

Here's Why Nvidia's Stock Could Still Go Higher This Year | The Motley Fool

Nvidia (NVDA -0.18%) generated impressive, life-changing returns in just a fairly short time. In five years, the stock has grown by close to 2,800%. To put that in terms of real dollars, a $5,000 investment in the company back then would be worth more than $140,000 right now. But investors may be concerned that the tech stock is too expensive to still be a good buy today. While a massive return over the next five years may be unlikely, there's a strong bullish case to be made for buying Nvidia stock today. Here's why it could have plenty of upside in both the short term and the long term. Nvidia is constantly innovating and coming out with new chips that can help companies train and develop artificial intelligence (AI) models. It enjoys a dominant market position today and is building on that position as it looks to ensure its lead remains strong. The company's new Blackwell AI chips cost up to $40,000 per unit. Despite the high price, CEO Jensen Huang says demand for them has been "insane." In what may be the clearest sign that the AI boom remains alive and well, Huang told CNBC in an interview recently that companies remain eager to get the latest and greatest chips: "Everybody wants to have the most and everybody wants to be first." For investors, that's a great sign that the business is still experiencing high demand for its chips. When Nvidia reported earnings in August, its stock didn't take off despite hitting $30 billion in quarterly revenue for the quarter ending in July and experiencing 122% growth. Expectations may have been a bit too high. But if demand for the Blackwell chips is as strong as Huang is suggesting it is, the company may offer upgraded and stronger guidance for future quarters. That could be just what's needed to send the stock higher this year. Nvidia's next earnings report is expected to come out in November. For long-term investors, there's an even easier case to make as to why it may not be too late to invest in Nvidia. The AI revolution is in its early stages with a lot of businesses developing their own AI models and integrating new technologies into their workflows. Analysts from Grand View Research project that by the end of the decade, the global AI chip market could be worth more than $323 billion as it expands at a compounded annual growth rate of 28.9% until then. With Nvidia being the leader in the AI chip market, it stands to benefit from all that future growth. Even despite the stock's massive gains in recent years, it's trading at a forward price-to-earnings multiple of 34, which may not seem all that expensive for the fast-growing business. Its price-to-earnings-growth ratio of 1 suggests it's a cheap buy even when you factor in the five-year growth that analysts project for the business. There are AI stocks out there that are cheaper than Nvidia, but as the leader in AI chips, it offers investors a fair bit of safety in the long run, knowing they're going with the big brand and top company in the AI chip market. Even if it doesn't generate four-figure returns in the next five years, it still has the potential to be a solid market-beating investment, making Nvidia one of the safer growth stocks you can add to your portfolio today.

Jensen Huang Just Delivered Incredible News for Nvidia Stock Investors | The Motley Fool

The CEO of Nvidia just provided an update on the company's new Blackwell artificial intelligence chips. Nvidia (NVDA -0.18%) supplies the most powerful graphics processing chips (GPUs) for developing artificial intelligence (AI) models. The company has an impressive list of customers who are spending truckloads of money to fill their data centers with those chips as they battle for AI supremacy. In fact, Nvidia CEO Jensen Huang believes AI infrastructure spending will top $1 trillion over the next five years, and his company is likely to be the biggest winner because it has a dominant market share in the GPU space. In an interview with CNBC last week, Huang made a series of positive comments about Nvidia's new Blackwell GPU architecture. Here's why every investor in Nvidia stock should be excited. Last year, Nvidia's H100 data center GPU set the benchmark for AI development. It's still in hot demand today, but it was superseded by the H200, which is capable of performing AI inference (ingesting live data into AI models to make predictions) at twice the speed. But Nvidia's Blackwell architecture delivers a major leap in performance. The new Blackwell-based GB200 NVL72 system is capable of performing AI inference at a staggering 30 times the speed of the equivalent H100 system. Plus, each individual GB200 GPU is expected to sell for between $30,000 and $40,000, which is in the ballpark of what many data center operators originally paid for their H100 GPUs. In other words, Blackwell is going to deliver an incredible improvement in cost efficiency. That's really important because most AI developers rent data center computing capacity by the minute from tech giants like Microsoft and Amazon. Blackwell will bring down the cost of deploying more powerful large language models (LLMs), which will make advanced AI applications affordable for a wider group of consumers and businesses. During its fiscal 2025 second quarter (ended July 28), Nvidia generated a record $26.3 billion in data center revenue, up 154% from the year-ago period. The company -- along with most Wall Street analysts -- expects data center revenue to continue surging higher for the foreseeable future. However, there have been questions about how long tech giants can continue spending so much money on their AI infrastructure. Microsoft, for example, reported $55.7 billion in capital expenditures (capex) during its fiscal 2024 (ended June 30), much of which went toward data centers and chips. The company plans to spend even more in fiscal 2025. How sustainable is this level of investment across the tech industry? In September, Oracle founder Larry Ellison told analysts about a dinner he attended with Tesla CEO Elon Musk and Jensen Huang. He recalled Musk and himself begging Huang for more GPUs so they could bring their AI aspirations to life, but the chip giant simply can't keep up with demand. In a CNBC interview last week, Huang said, "Blackwell is in full production, Blackwell is as planned, and demand for Blackwell is insane." He also said, "Everybody wants to have the most, and everybody wants to be first" when it comes to Blackwell, which really highlights the existence of an AI arms race in the tech industry. Besides Microsoft, Amazon is on track to pour over $60 billion into capex, including AI-related investments, in calendar 2024. Alphabet will spend around $50 billion, and Meta Platforms plans to spend up to $40 billion. Oracle's capex totaled $6.9 billion in its fiscal 2024 (ended May 31), and it intends to double that number in fiscal 2025. If AI infrastructure spending tops $1 trillion in the coming years, as Huang expects, then Nvidia's data center revenue likely has years' worth of growth left in the tank. Nvidia stock is currently trading about 11% below its all-time high. Wall Street is forecasting $4.02 in earnings per share for the company's fiscal 2026 (which begins at the end of Jan. 2025), giving the stock a forward price to earnings (P/E) ratio of 31.8. The Nasdaq-100 technology index sports a similar forward P/E ratio of 29.8, so investors who are willing to hold Nvidia stock for at least the next couple of years are buying in at a compelling price, despite the stock's incredible ascent since early 2023.

Does This 1 Word From Nvidia CEO Jensen Huang Make the Stock a Buy? | The Motley Fool

Nvidia's artificial intelligence chip strengths have helped earnings to soar. Nvidia (NVDA -0.18%) stock has rocketed higher, climbing 2,600% over five years, as the company took the world of artificial intelligence (AI) by storm. This tech player holds 80% of the AI chip market and has expanded into a wide variety of AI products and services to serve just about every need of a customer building an AI platform. All of this has translated into outsized earnings, with revenue and profit soaring in the triple digits in recent quarters. This is fantastic, but it's also prompted investors to pose the inevitable question: Is Nvidia still a buy -- or have the biggest gains already happened? After all, rivals have revved up their competitive engines, producing better and better AI chips selling for lower prices than those of Nvidia. Nvidia chief executive officer Jensen Huang pronounced one word recently that could help us answer our question. Let's check it out. First, though, before we get to Huang's comments, let's begin with a quick refresher on how Nvidia got to this point. The company, after all, was most known for serving gamers just a few short years ago. And this key role in the gaming industry, with its graphics processing units (GPUs) powering this form of entertainment, is how Nvidia got its start in the high-growth area of AI. GPUs process many tasks simultaneously, and this prompted Nvidia to consider other uses for the chip. The company even created the parallel computing platform CUDA to make this transition happen. And then came the AI boom, and it was clear that the GPU could play a major role in developing this technology. Nvidia's GPUs -- even considering the latest models of rivals -- are the fastest on the market, meaning customers can save time and money by using them over the long term. So, more and more AI customers gave Nvidia a try, and these days powerhouses from Meta Platforms to Amazon have flocked to the company. Oracle co-founder Larry Ellison even said recently that he and Tesla chief Elon Musk actually "begged" Huang for more GPUs. And now is the perfect moment to consider the recent word from Huang that could help you make an investment decision. Demand for the company's new Blackwell AI chip is "insane," he told CNBC in a recent interview. Nvidia is preparing to launch the platform later this year. Then Huang went on to say: "Everybody wants to have the most, and everybody wants to be first." This corroborates Nvidia's comments during its earnings call back in August, when the company said demand for the new Blackwell architecture and chip surpassed supply -- and Nvidia indicated this was likely to continue well into next year. So, now let's consider our question: Does this "insane" level of demand make Nvidia a buy? Well, it does address one big risk Nvidia faces, and that's the threat of competition. In spite of Blackwell's high price tag -- ranging from $30,000 to $40,000 per unit -- customers literally are begging for more if we use the Ellison story as an example. Huang's comment shows that, even though rivals like Intel and Advanced Micro Devices offer less expensive high-performance chips, this isn't luring away Nvidia customers. They still are willing to pay more to access the world's leading product. This is a reason to be very optimistic about Nvidia's prospects in the coming year. But what about beyond that point? Nvidia has promised to update its GPUs on an annual basis, and this focus on innovation means it's likely to stay ahead. If customers are happy with the new Blackwell chip, they probably will want to stay on board for even better performing GPUs from Nvidia down the road. And Nvidia's strategy of offering complete systems, from enterprise software to networking, make it easy for a customer get an AI project going. Today, Nvidia shares trade for 44x times forward earnings estimates. This isn't dirt cheap, but it's a reasonable price for a company with such a strong market position -- and in a high-growth market. So, all of this means that Huang's one word -- and many other positive elements -- make Nvidia stock a buy today. Even after its jaw-dropping gains in recent years, the stock still could have much farther to go over time.

Nvidia Stock Rallied (Again) Today, but Is Still 10% Off Its All-Time High. Is the Stock Still a Buy? | The Motley Fool

Investor concerns regarding the momentum of artificial intelligence (AI) and a lofty valuation have punished the chipmaker. The future still looks bright. Nvidia (NVDA 3.19%) has been on an epic roller-coaster ride in recent months. After taking a beating over the summer and losing more than a quarter of its value, the stock has mounted an impressive recovery and now sits roughly 10% off its all-time high (as of this writing). Comments made by CEO Jensen Huang helped fuel its rise today, as the stock gained 3.1% as of 2 p.m. ET. Despite the volatility, investors should keep their eyes on the prize. Nvidia has become something of a battleground stock in recent months and both sides have valid points. Management's most recent forecast calls for sales growth of 80% for the current quarter. While that's a deceleration of the triple-digit growth that captured headlines over the past year, it's still impressive nonetheless. Bears also point to the company's gross margin of 75.1% in its fiscal 2025 second quarter (ended July 28), noting a decline from 78.4% in Q1. Given that it was a record performance, it's best viewed in that context. Management noted gross margin was down sequentially due to product mix and inventory provisions for its next-generation Blackwell AI processors, which are scheduled to begin shipping in Q4. Historically, new products have carried a higher margin profile, which could send gross profits higher. Furthermore, in an interview yesterday, CEO Jensen Huang noted that demand for the Blackwell processors was "insane." Finally, bears point to Nvidia's lofty valuation, and at 58 times earnings, it's easy to see their point. However, analysts' consensus estimates are calling for Nvidia to generate earnings per share of $4.02 in its fiscal 2026 (which begins in January). That works out to less than 30 times next year's expected earnings, which is comparable to a price-to-earnings (P/E) ratio of 30 for the S&P 500. We're still in the early innings of generative AI adoption. Some experts estimate the market will be worth $1.3 trillion by 2032, according to Bloomberg Intelligence. As a company at the forefront of the AI revolution, Nvidia still has plenty of upside ahead. That's why the stock is still a buy.

3 Reasons to Buy Nvidia Stock Before October 7 | The Motley Fool

October 7 kicks off Nvidia's AI Summit, a big event for the whole industry. It's no secret that Artificial Intelligence (AI) stocks have dominated the market for the last few years. With firms like PwC -- one of the "big four" accounting firms -- making claims that AI could add $15.7 trillion to the global economy by 2030 -- the hype makes sense. The revolution's poster child, Nvidia (NVDA 1.69%), saw its stock skyrocket nearly 1000% from late 2022 to today, but the last few months have not been as kind. After reaching its highest peak in June, shares of Nvidia are down about 10%. More significant market fears mixed with slower growth have caused some to cool on the once red-hot stock. So, where to go from here? As the de facto leader of the entire industry, Nvidia needs to continue to do just that: lead. The 2024 AI Summit, which begins October 7, is a chance for the company to bring together some of the biggest faces and best minds in the industry to help push AI forward, all while keeping itself front and center. It's a chance to communicate Nvidia's vision not just to other industry leaders, but to the public at large. One of the primary questions investors have for the company -- and it's a very legitimate one -- is: Are the real-world applications of AI that impactful? Is the incredible cost of AI hardware worth the investment? The summit will be a chance for Nvidia to showcase the myriad ways AI can be used to return real value. It's a chance to justify the enormous cost of its chips and, ultimately, the price of its shares. The event in and of itself is unlikely to move the needle, but it may help ease some fears and get investors thinking about the possibilities and power of AI. Luckily, the event isn't happening in a vacuum. Here are a few reasons why Nvidia is in a prime position to capitalize on the event. In Nvidia's only major snafu since the AI boom took off, the company announced its latest line of chips, dubbed Blackwell, was delayed. Issues in its manufacturing meant they wouldn't be shipped on time. Nvidia assured that shipments would only be delayed a quarter. Despite these reassurances, some investors worried the issues were more fundamental and the delay would be longer. It seems those fears were unfounded. According to a recent report by Tom's Hardware, the company is ready to ship the first batch as early as December, only about six weeks behind the original schedule, although these reports have yet to be confirmed by Nvidia. If true, it would do a lot to ease investors' fears and show that the company went above and beyond in fixing its mistake. Still, even if they don't ship until later in the quarter, the rollout will be huge for the company regardless. Their impact will be felt immediately, with billions in sales expected before the end of its Q4. It's easy to get bogged down in numbers and fixate on balance sheets and income statements, and while these are extremely important when evaluating a business, certain intangibles are often what makes a company great, like vision. Nvidia has it in spades. Under the leadership of CEO Jensen Huang, the company has been at the forefront of several macro movements in tech. Huang saw back in the early 90s that computer graphics would be huge. The company's GPUs -- graphics processing units -- are a big part of what enabled the video game industry to evolve to where it is today. This vision is why the company controls roughly 90% of today's AI chip market. Nvidia saw that its GPUs could do much more than push the bounds of computer graphics; they could power a new technological revolution. It's why the company caught its competition sleeping. Since the current AI boom took off in late 2022, Nvidia's chips have consistently been miles ahead. Other chipmakers have been playing catch-up ever since. There was relative parity between Nvidia and its longtime rival AMD for decades. Not so anymore; last year, Nvidia made more in profit than AMD made in total revenue. The difference right now is stark, but remember, if Nvidia is profiting much more than its rival, it can then afford to spend more on research and marketing to widen its moat and fend off competitors. I know I just said not to get bogged down in the numbers, but they are still important. How is the market valuing Nvidia right now? At a price-to-earnings ratio (P/E) of 56, Nvidia isn't cheap, but given its current pace of growth, a trailing P/E isn't really the best metric for us. Its forward P/E -- that is, a P/E that accounts for its expected earnings in the next 12 months rather than the last 12 -- is just above 30. That's not bad in the world of tech. It's just about where Apple and Amazon sit. Another useful valuation is the PEG ratio, which you get by dividing a company's P/E by its expected earnings growth. This is an excellent metric for companies with a lot of growth potential. As a very general rule, a PEG under 1 is what we're looking for. Nvidia's is 0.94. Nvidia has plenty of room to deliver the kind of growth that can justify its current valuation. To be sure, metrics are not the be-all and end-all. They are imperfect instruments, and of course, metrics that rely on expected earnings are especially imperfect -- the future is anything but guaranteed. I believe Nvidia will continue to outperform the market for some time.

Is It Too Late to Buy Nvidia Stock? Wall Street's Answer May Surprise Investors | The Motley Fool

Wall Street analysts still see substantial upside for Nvidia shareholders. Nvidia (NVDA 1.58%) shares rocketed 745% during the 18-month period that ended on June 30, 2024, as enthusiasm about artificial intelligence (AI) swept the market. But shares have declined 5% since that halfway point, leaving some investors to wonder whether the window of opportunity has closed. Wall Street has a clear answer: No, it's not too late to buy Nvidia. Of the 64 analysts that follow the company, 94% rate the stock a buy and 6% rate the stock a hold. Not a single analyst recommends selling at the present time. Additionally, Nvidia has a median 12-month price target of $150 per share, implying 28% upside from its current share price of $117. Beyond that, some analysts expect colossal gains. In June, Beth Kendig at the I/O Fund estimated Nvidia would be worth $10 trillion by 2030. That implies 250% upside from its current market value of $2.8 trillion. In September, Phil Panaro at Boston Consulting Group predicted that Nvidia would be an $800 stock by 2030. That implies about 585% upside. Investors may find that surprising given that Nvidia is already one of the largest companies in the world. But AI could be the investment opportunity of a lifetime, and Nvidia is arguably the most important company to the AI economy. Here's what investors should know. Nvidia builds the most coveted graphics processing units (GPUs) in the computing industry. GPUs are chips that perform technical calculations more quickly and efficiently than central processing units (CPUs), which lets them accelerate complex workloads like training large language models and running artificial intelligence (AI) applications. Nvidia accounted for 98% of data center GPU shipments last year, and its market share in AI chips exceeds 80%, according to analysts. One reason the company has achieved such a dominant position is the superior performance of its hardware. Nvidia chips consistently outstrip products from competitors at the MLPerf benchmarks, objective tests that evaluate AI systems across training and inference tasks. Another reason Nvidia has achieved such a dominant market position is its CUDA software ecosystem. CUDA comprises hundreds of software libraries that simplify the development of GPU-accelerated applications. No other chipmaker offers anything close to CUDA, so Nvidia GPUs have emerged as the gold standard in data center accelerators. Nvidia has cemented its dominance in the data center by expanding into adjacent verticals. For instance, the company leads the market in networking equipment used for generative AI, and it recently introduced its first server CPU. Nvidia also offers subscription software and cloud services that support the development of AI applications across a broad range of domains, from recommender systems in retail to computer vision in healthcare. In short, Nvidia has a durable competitive advantage where AI is concerned not only because its chip are the fastest, but also because it participates in so many parts of the AI economy. To quote Zoe Thomas of The Wall Street Journal, "Nvidia already dominates the market for chips powering the artificial intelligence boom. Now the company is playing a growing role in designing AI data centers." Grand View Research estimates the AI accelerator market will increase at 29% annually through 2030, while spending across AI hardware, software, and services compounds at 36% annually during the same period. That bodes well for Nvidia and its shareholders. In May, Toshiya Hari at Goldman Sachs wrote, "We believe Nvidia will remain the de facto industry standard for the foreseeable future given its competitive advantage that spans its hardware and software capabilities, as well as the installed base and ecosystem it has built over multiple decades, and the pace at which it is and will be innovating over the next several years." But he's not the only Wall Street analyst to lavish Nvidia with praise. Dan Ives at Wedbush Securities has called the company the "foundation of the AI revolution." And Angelo Zino at CFRA believes Nvidia "will be the most important company to our civilization over the next decade as the world becomes more AI-driven." With that in mind, Wall Street expects Nvidia's adjusted earnings to grow at 49% annually through fiscal 2026 (ends January 2026). That consensus makes the current valuation of 53 times adjusted earnings look quite reasonable. Patient investors can comfortably buy a small position today, and they should consider adding to the position in the event of a pullback.

Prediction: Nvidia Could Be Headed to $150 in 2025 | The Motley Fool

Nvidia's upcoming Blackwell launch could push the stock higher. Nvidia (NVDA 2.24%) stock has been one of the market's top performers in recent years, soaring a mind-boggling 2,600% over the past five. And this year, the trend continues with Nvidia stock heading for a 150% gain. All of this is thanks to the company's dominance in the artificial intelligence (AI) chip market, where it holds more than 80% share. And Nvidia hasn't stopped there but has developed a broad range of AI products and services, helping the company deliver billions of dollars in earnings quarter after quarter. In fact, Nvidia has been on a roll, growing quarterly revenue in the triple digits year over year. So now, the natural question is: With all of this positive momentum, where is Nvidia's stock going to land in 2025? Today, Nvidia shares trade for about $124 following the company's 10-for-1 stock split in June. A stock split doesn't change the total value of a company but lowers the price of each individual share through the issuance of new shares to current shareholders. This makes it easier for a broader range of investors to access the stock. From this new price level, my prediction is Nvidia could be headed to $150 next year as gains continue but potentially at a slower pace than in recent times. Let's find out more. First, some background on Nvidia. The company sells graphics processing units (GPUs) used to power many tasks -- from gaming to AI. Gaming actually was Nvidia's biggest business a few years ago, but as the AI boom accelerated, so did Nvidia's AI business. Data-center revenue, accounting for 87% of Nvidia's total revenue, came in at more than $26 billion in the most recent quarter -- a record and a triple-digit gain from the prior year. Other companies sell AI chips, but Nvidia's are particularly sought-after due to their speed -- they're the fastest around, and Nvidia says this high performance can save customers money over the long term. So, while they pay more for a Nvidia GPU today, they're likely to have a lower-total cost of ownership over time. Companies developing major AI projects clearly are on board because demand for Nvidia's soon-to-launch architecture Blackwell is surpassing supply. Nvidia Chief Executive Officer Jensen Huang says he expects this trend to continue well into next year even as Nvidia works night and day to bring supply to the highest levels possible. In a recent interview with CNBC, Huang even said demand for the company's new Blackwell chip is "insane." All of this should support the idea of more gains for Nvidia stock. The company predicts that after ramping production of Blackwell in the fourth quarter, Nvidia also should see "several billion dollars" in revenue from the platform in that quarter too. We also should expect a clear picture of how the demand for Blackwell translates into earnings in the following quarters throughout 2025. If Nvidia is able to serve most of the demand and generate growth from Blackwell from quarter to quarter, I would expect investors to continue flocking to the stock. It's also important to keep in mind that Nvidia isn't cheap, but it isn't excessively expensive for a growth stock either -- at 44 times forward-earnings estimates -- especially considering potential for growth down the road thanks to the company's market leadership and focus on innovation to keep its top spot. So Nvidia stock could increase in valuation from today's level and still remain reasonably priced. Now let's talk market value. If Nvidia were to increase to $150 next year, market cap would reach $3.6 trillion, roaring past the value of market giant Microsoft, today worth $3.09 trillion. But it's important to keep in mind that Microsoft, too, may climb next year, keeping it ahead of Nvidia. In any case, I would expect the two companies, both building solid positions in the high-growth area of AI, to remain neck and neck when it comes to market value over the coming year. Finally, my prediction of an increase to $150 represents a gain but only about 20% from today's level. That isn't much compared to this year's winnings so far. I'm not any less positive on Nvidia than I was earlier in the year. But stocks generally don't soar nonstop without any slowdown in the pace from time to time, and Nvidia, considering its enormous advance over the past few years, now may enter a phase of more measured increases. And this is actually positive because it would show that Nvidia stock isn't a bubble ready to burst but instead a player that has what it takes to deliver lasting gains over the long haul.

Prediction: Here's Where Nvidia Is Headed in 2025 | The Motley Fool

Demand for the company's graphics processing units (GPU), data center services, and compute unified device architecture (CUDA) software have helped propel the stock by an absurd 900% during the past two years. Below, I'm going to explore what catalysts I see that could cause Nvidia stock to continue rising while also acknowledging some risk factors that could stymie it. At the end, I'll reveal my final prediction for where Nvidia stock could be headed in 2025. During the past few months, investors gained more insight into the spending plans of many of the technology sector's largest players. Microsoft, Meta Platforms, Alphabet, Amazon, and Tesla all acknowledged the need for more AI infrastructure. Rising capital expenditures (capex) from big tech will serve as a tailwind for Nvidia's compute and networking operation. To be more specific, the company's Blackwell GPU introduction is poised to be a major bellwether for Nvidia, and I suspect that big tech will be first in line for these new chips. Nvidia Chief Executive Officer Jensen Huang recently said that demand for Blackwell is "insane," while Chief Financial Officer Colette Kress said that "in Q4, we expect to get several billion dollars in Blackwell revenue." Blackwell production into next year, combined with more planned spending from big tech, should bode well for Nvidia. As a result, I would not be surprised to see Nvidia stock rise in 2025. One of my biggest trepidations over Nvidia stems from competition. Although each of the mega cap tech companies referenced above are thought to be some of Nvidia's largest customers, their plans to spend more on AI infrastructure is not all good news for the company. Many of these tech giants have already started developing their own chips in an effort to move away from their dependence on Nvidia. These moves could have a ripple effect on Nvidia in the form of decelerating revenue and profit growth. As a result, shares of Nvidia could slide. It's this particular dynamic that has me curious about why big-name hedge funds such as Ken Griffin's Citadel and David Shaw's D. E. Shaw have been trimming their Nvidia positions. Even amid the backdrop of the Blackwell launch, so-called smart money hedge funds seem to be taking profits on Nvidia stock. I think that part of the selling activity is influenced by the fact that with each passing earnings report, expectations are becoming higher for Nvidia. Gauging the success of the Blackwell launch is pretty subjective. Even if these new GPUs help generate further record growth for Nvidia, investor expectations may be disconnected from reality. Subsequently, both individual and institutional investors could punish the stock, and Nvidia shares could witness a sharp sell-off. I know this may come across like I'm trying to avoid making a firm prediction, but I think Nvidia stock is going to wind up being little changed in 2025. There are several factors that could inspire additional buying and selling of Nvidia stock next year, yet I do not find any of these material enough to cause an annual gain or decline. What I would be thinking about is if Nvidia stock could rise by another 900% over the next year or even 10 years. In my eyes, I firmly think the answer is "no." So, although there probably is good money to be made owning Nvidia stock in 2025, I think timing is going to be a big factor here. However, as a long-term investor, I try to avoid timing stocks and instead look for quality businesses that can post consistent gains over the course of many years. Can Nvidia continue doing that? Maybe. But for me, I think there's a good chance that Nvidia stock has peaked, and that it's best days are entering the rearview mirror.

Should You Buy Nvidia Before Oct. 7? | The Motley Fool

Investors have flocked to artificial intelligence (AI) stocks in recent times thanks to the technology's promise of revolutionizing everything from our daily lives to how businesses are run. And we're just at the beginning of this high-growth story. Today's $200 billion market is forecast to reach beyond $1 trillion by the end of the decade. All of this has translated into double-digit gains this year for many companies that support the development of AI -- or are developing AI themselves. At the head of the pack is Nvidia (NVDA 1.58%). The global AI chip leader has seen its stock price soar about 135% so far this year. Nvidia's graphics processing units (GPUs) are the fastest on the market, and customers have recognized this, helping push Nvidia's revenue to triple-digit gains quarter after quarter. It's no surprise that Nvidia shareholders and potential investors closely watch this company's every move for clues about what's ahead -- and use this to make investing decisions. And now, they may be looking to Nvidia's AI Summit beginning Oct. 7 as a potential catalyst. Should you buy Nvidia stock before the event? Let's find out. First, a few details about the summit. It's happening on site in Washington D.C. as well as virtually from Oct. 7 through Oct. 9. The event is looking like a popular one because general conference passes are sold out at this point -- but limited quantities of exhibit-only passes still are available as of this writing. At the summit, I wouldn't expect updates on Nvidia's latest products or announcements of new products or services. Instead, this event is designed to show exactly how the company's technology -- and AI in general -- is revolutionizing many industries. A variety of speakers, from Nvidia's own vice president of enterprise platforms Bob Pette to The Weather Company's chief executive officer Sheri Bachstein will talk about the latest AI developments. While this event probably won't offer us news about Nvidia's upcoming release of its new Blackwell architecture, for example, it will give investors some important information. And this is how AI actually is being used right now. Topics to be covered include cybersecurity, robotics, healthcare, and many more. Nvidia's event also will feature live demos such as Earth-2, the company's climate forecasting tool. All of this is a big plus for Nvidia because it shows AI isn't just a technology of hopes and dreams, but it actually is in use and driving major results across industries today. This should lead to ongoing revenue for Nvidia, as it sells the tools and services necessary to keep this progress going, and that's positive news for Nvidia shareholders and potential shareholders. Now, let's get back to our question: Should you buy Nvidia shares before Oct. 7? While the AI Summit may put Nvidia in the spotlight next week, I don't expect it to act as a catalyst for stock performance. What generally drives the stock's performance is news regarding product releases, earnings reports, or economic news that could affect the company -- positively or negatively. All of this means it won't make much of a difference if you buy Nvidia shares today or after Oct. 7, especially if you hold on for the long term. Day-to-day fluctuations won't change your overall return if you hang on to the shares for five or 10 years. So, the next question is: Whether you make the move now or in a few days, is Nvidia really a buy? After all, the stock has roared higher not only this year, but for quite some time. It's gained 2,500% over five years. Though Nvidia shares, at 41 times forward earnings estimates, aren't the cheapest around, they're worth the price considering the company's earnings track record, solid market position, and focus on innovation to keep it in the lead. Nvidia shares may not continue at the same pace uninterrupted -- stocks don't rise in a straight line forever -- but Nvidia still has plenty of room to run over the long term. And that makes Nvidia a fantastic AI stock to buy today -- or after next week's AI summit.

Nvidia Stock Could Soar Another 561%, According to a Wall Street Analyst

A Wall Street analyst has set an ambitious target for Nvidia by 2030. If you invested $100 in Nvidia (NVDA 1.69%) at the beginning of 2023, you would now have $830 thanks to the remarkable surge in the company's shares fueled by artificial intelligence (AI). Even so, the stock could jump from about $120 now to around $800 by 2030, according to one analyst. Phil Panaro, a former senior advisor at the Boston Consulting Group, believes that the continuing growth of AI and the arrival of Nvidia's next-generation Blackwell processors could lead to annual revenue of $600 billion in 2030 from $61 billion in fiscal 2024. Let's look at the catalysts mentioned by Panaro and check if they are strong enough to help Nvidia sustain its phenomenal growth in the long run. The increasing demand for accelerated computing Nvidia CEO Jensen Huang said on his company's August earnings conference call that accelerated computing is going to be a long-term growth driver. Huang said the transition from general-purpose computing -- using central processing units (CPUs) -- to accelerated computing based on graphics processing units (GPUs) could help reduce computing costs by 90%. Because GPUs speed up demanding workloads in data centers that would have otherwise taken longer using CPUs, Nvidia says, accelerated computing is not only faster, but it is also more sustainable because of its smaller energy footprint. Huang projected "$1 trillion worth of data centers in a few years will be all accelerated computing" based on their energy efficiency. Data centers are estimated to account for 1% to 2% of global energy consumption, a figure expected to double by the end of the decade. So the much faster pace of GPUs compared to CPUs is expected to help reduce energy consumption long term. The demand for data center accelerators is forecast to have a compound annual growth rate (CAGR) of 28% through the next five years. And the massive end market that the transition to accelerated computing is likely to create, Huang said, could mean that his company is at the beginning of a phenomenal growth curve. That's because Nvidia is the dominant player in the data center GPU market. It reportedly controlled 98% of this space at the end of last year, so it stands to win big from the secular growth in accelerated computing even if it loses some of that market share. The outlook for Nvidia's upcoming Blackwell AI GPUs seems to be solid, with the company saying demand is tracking ahead of supply, a trend that's likely to continue next year as well. Why a $600 billion top line seems achievable Nvidia's solid prospects discussed above help explain why the company's revenue estimates have received a nice bump for the next three fiscal years. NVDA revenue estimates; data by YCharts. As shown in the chart above, Nvidia's top line is expected to cross $207 billion in fiscal 2027, more than triple its fiscal 2024 revenue. The company's fiscal 2027 will coincide with the majority of calendar year 2026. So to hit $600 billion in revenue by calendar year 2030 (Nvidia's fiscal 2031), it will need an annual growth rate of 30% over a four-year period. Nvidia serves multiple fast-growing markets such as AI chips (expected to grow at an annual pace of 41% through 2032), digital twins, and cloud gaming, so there is a good chance that it could indeed hit $600 billion in revenue by the 2030 calendar year. But it remains to be seen if that growth translates into the potential upside that Panaro predicts for the stock. Assuming Nvidia does reach $600 billion in sales in 2030, the stock will have to maintain its current price-to-sales ratio (P/S) of 32 to generate 561% returns from this level. That would translate into a market cap of $19.2 trillion, compared to the current level of just under $3 trillion. If we don't give Nvidia such a rich sales multiple and assume that it is trading at a P/S of 8 (in line with the U.S. technology sector's average) by 2030, its market cap would jump to $4.8 trillion. So, Nvidia could deliver 61% gains from current levels assuming it trades at a more reasonable valuation. But if the market decides to keep rewarding the company with a rich multiple because of its healthy growth, there is a good chance that it could deliver a much stronger upside in the long run -- and might even get close to Panaro's ambitious estimate.

Should You Buy Nvidia Stock As Its AI Summit Gets Underway? History Says This Will Happen. | The Motley Fool

Artificial intelligence (AI) leader Nvidia (NVDA 1.69%) is set to host its 2024 AI Summit starting Oct. 7. The event will bring together leaders from across the industry to see and hear from some of the foremost minds in AI. It's a chance to catch a peek at the future of this potentially revolutionary technology. With such a big event upcoming, you might be asking yourself: Should I invest in Nvidia now? History may give us a clue. Let's take a closer look at the company. There was a time when Nvidia and its longtime rival, Advanced Micro Devices, were neck and neck in their battle to control the gaming market. By and large, there was parity between both of the company's income statements. That's changed. After AI hit an inflection point in late 2022, Nvidia is dominating AMD, earning more in profits than AMD does in total revenue. Take a look at this chart, which shows just how monumental the recent shift has been. That's what you get when you control 90% of a market as valuable as AI silicon. The great news for Nvidia is that it doesn't look like the gravy train will stop anytime soon. The messaging from the rest of big tech, the companies that represent most of its business, is that their spending is likely to accelerate in the near future. This is a race of sorts, and none of the big players can afford to be left behind. As Alphabet's CEO, Sundar Pichai, put it in the company's latest earnings call: "The risk of underinvesting is dramatically greater than the risk of overinvesting for us here." Alphabet expects to spend roughly $50 billion this year in capital expenditures (capex), up from $32 billion the year before -- and it's not alone. At present, the bulk of this spending is still flowing through Nvidia as AMD, Intel, and others struggle to match the power and efficiency of Nvidia's chips. There is still enormous demand for its current generation, and the company's next generation will likely ship within the next few months. The massive profits Nvidia has enjoyed means it has large amounts to spend on maintaining its edge. Despite already leading the pack, Nvidia outspent AMD in research and development roughly two to one last quarter. This will be the third year in a row that Nvidia will host an AI event in this vein. The company began these events in 2022 with a virtual event focused on speech in AI. 2023 was supposed to be the first year of a full-fledged, multi-day AI summit, but the event was moved online for a single day. This year's event will take place in person over three days. Despite their more modest meeting formats, both of the previous iterations led to a nice bump-up in Nvidia's stock price. In the week that followed 2022's event, shares were up as much as 10%. In 2023, they were up as much as 6.5%. So will this year's conference also lead to a jump in stock price? Maybe. I know that might be a disappointing answer, but the truth is that we can't know for sure. First of all, two years is a very small sample size from which to draw firm conclusions. Also, even if we had more years to reference, correlation is not causation. Just because two things can be linked -- like an AI summit and a jump in stock price -- doesn't mean one happens because of the other. But the event is a chance to remember the power that AI holds. Instead of thinking about possible short-term stock movements, focus on the company's long-term prospects. Don't lose sight of the forest for the trees. This is a company at the top of its game, enabling the adoption of a potentially revolutionary technology.

Meta Platforms Just Hinted That Nvidia Is Going to Have a Monster 2025

As we enter the final quarter of 2024, some investors might be thinking about how they want to position their portfolio heading into 2025. This includes assessing winners and losers, and if you bought Nvidia (NVDA 2.24%) stock at the start of the year, you're sitting on some nice gains. With the stock rising around 150% so far in 2024, investors would be forgiven for thinking that it couldn't rise any higher. However, some hints on other companies' conference calls indicate that 2025 will be just as good a year for the company as 2024 has been. The question is, will the stock see the same benefit? Meta is going to buy a bunch more GPUs in 2025 Nvidia's incredible rise has been tied to the artificial intelligence (AI) arms race. Its primary product is the graphics processing unit (GPU), which can be used to perform multiple calculations in parallel. Additionally, companies don't just buy one or two of these units. Instead, they buy them by the thousands. This gives AI researchers ridiculous computing power and allows them to train AI models quickly. As these models get more complex, the amount of time it takes to train them rises exponentially. Take Meta Platforms' (META -1.87%) Llama generative AI model, for instance. The current iteration is Llama 3.1, but Meta has already started training Llama 4. However, CEO Mark Zuckerberg noted that the training time for Llama 4 will likely be 10 times as long as it took to train Llama 3. Beyond Llama 4, the training time will likely increase again. This isn't just a Meta problem. OpenAI's ChatGPT, Alphabet's Gemini, and other generative AI models will experience the same phenomenon as these models improve and become more complex. Do you think these AI innovators will just wait 10 times longer for their next AI model to train? Probably not. Instead, they'll increase their computing power to speed up the process, significantly benefiting Nvidia. In its Q2 earnings release, Meta also commented that its infrastructure cost expense will significantly rise in 2025. This is clearly tied to its computing power build-out to create the best AI model it can. Nvidia will be a primary beneficiary of this, making it an intriguing stock for 2025. Nvidia should have strong growth in 2025 Nvidia also has some tricks up its sleeve for 2025. Its Blackwell technology is expected to launch and, according to CEO Jensen Huang, provides 3 to 5 times more AI throughput in a power-limited data center than Hopper, Nvidia's current architecture. That's a big deal, and Blackwell could become a new source of revenue growth for Nvidia. Currently, demand for Blackwell is "well above supply," according to management. This is just part of the reason why Wall Street analysts believe that Nvidia can grow fiscal year 2026 (ending January 2026) revenue by 42%. It also expects strong earnings growth, with earnings per share (EPS) expected to rise from $2.84 in fiscal 2025 to $4.02 in fiscal 2026. At today's prices, that would value the stock at around 30 times fiscal 2026 earnings. Considering Nvidia's growth, that's not a terrible price to pay for the stock if it can keep up its business past fiscal 2026. Looking one year out is hard enough, but looking two years out is considerably harder. The major question is whether the demand for Nvidia's GPUs will last past fiscal 2026. If it won't, then Nvidia's not worth buying here. But if it does, Nvidia's stock could be a great purchase right now.

Should You Follow These Billionaires and Dump Nvidia Stock? 3 Questions to Consider | The Motley Fool

Semiconductor specialist Nvidia (NVDA 1.69%) has emerged as the face of the artificial intelligence (AI) revolution. Over the last two years, the company has gained trillions in market cap and now sits behind just Apple and Microsoft as the world's third-most valuable company. And yet, despite its meteoric rise to the top, some of the world's largest hedge funds have been selling Nvidia stock as of late. Two notable examples include Ken Griffin's Citadel reducing its stake in Nvidia by 79% last quarter and D. E. Shaw trimming its position by about half. Doesn't it seem odd that big-name investors are selling Nvidia stock on the backdrop of AI being the next big frontier? To be honest, maybe not. Below, I'll explore three areas that could be convincing billionaires to trim their positions in Nvidia while looking for growth elsewhere. One of the most integral components of generative AI development is advanced chipsets called graphics processing units (GPUs). While Nvidia is currently the biggest fish in the GPU pond, there is another side to this growth story. Namely, many other companies, including Microsoft, Amazon, Alphabet, Meta Platforms, and even Tesla, are developing their own AI infrastructures. Many of these companies are already building their own custom chips. This could be an issue because each big tech giant outlined above has long been rumored to be a major Nvidia customer. I'll concede that using their own chips will not be the end for Nvidia. These companies will likely remain customers and complement their chips with Nvidia's infrastructure. With that said, I think Nvidia will gradually lose its commanding pricing power as the GPU market becomes more saturated. Although it will take years, Nvidia will likely begin to witness a decline in revenue growth. As its top line starts to decelerate, I think it's natural that Nvidia's gross margins will tighten, which can significantly reduce the company's overall earnings power. For these reasons, I think more sophisticated investors are beginning to realize that Nvidia's ability to consistently generate record revenue and profits is shrinking. At the moment, Nvidia is well ahead of peers, such as Advanced Micro Devices or Intel, in the GPU realm. Perhaps the strongest pillar supporting Nvidia's fortress is the tight integration between the company's hardware and software. Nvidia's compute unified device architecture (CUDA) software layers on top of the company's GPUs. It is incredibly difficult for developers to use a combination of chips from other companies with Nvidia's CUDA. As a result, companies are opting to train their AI protocols entirely on Nvidia's end-to-end product suite. This dynamic has helped Nvidia gain an estimated 88% share of the GPU market. What's even more staggering is that the company's next-generation Blackwell GPUs, set to release later this year, could easily help Nvidia gain even further momentum and market share dominance. While this has played a big role in Nvidia's current trajectory, the momentum could come to a halt. Why? Well, given Nvidia's pseudo-monopoly, it's entirely plausible that the Department of Justice (DOJ) could investigate Nvidia's business practices. In turn, Nvidia could be forced to loosen its ecosystem, which would have implications for the company's growth. The chart below illustrates Nvidia's stock price over the last two years. With more competition on the horizon and the possibility of government intervention, it's hard to buy into a narrative in which Nvidia stock rises by another 900% over the next two years. I do not think the company has enough catalysts to run at a commensurate pace over the next several years. There are a lot of unknowns surrounding Nvidia and its future prospects. Will new chips from other "Magnificent Seven" members be a detriment to Nvidia? Will the DOJ accuse Nvidia of self-dealing and force the company to open up its products to be more congruent with competitor's chips? What I can say with some confidence is that the probability of Nvidia stock becoming another multibagger anytime soon is slim. Given the uncertainty surrounding Nvidia, its competitive landscape, and the pulse of the AI market in general, I think selling some stock and taking profits while also keeping some allocation in the company is a prudent strategy.

2 Artificial Intelligence (AI) Stocks That Could Go Parabolic | The Motley Fool

These companies are on track to make the most of the growing demand for AI hardware and software. Many companies have witnessed a tremendous increase in their share prices over the past couple of years thanks to the growing adoption of artificial intelligence (AI), which is not surprising as this technology has created massive demand for both hardware and software. The good part is that AI is currently in its early phases of growth. IDC estimates that global AI spending could increase at an annual rate of 29% over the next five years, hitting $632 billion in value in 2028. This robust increase in the adoption of AI could help make companies like Nvidia (NVDA 0.43%) and Snowflake (SNOW 3.02%) make a parabolic move, which refers to the rapid rise in the stock price of a company in a short time (just like the right side of a parabolic curve). Nvidia stock has already gained immensely in the past couple of years thanks to its pioneering role in the AI hardware market, but Snowflake has headed south because of its slowing growth. More specifically, Snowflake stock is down over 42% in 2024, while Nvidia has jumped 152%. Let's look at the reasons why AI could help one of these names make a parabolic jump and head even higher while also allowing the beaten-down Snowflake to rise rapidly. The robust demand for Nvidia's data center graphics processing units (GPUs) based on the Hopper architecture has played an instrumental role in the company's outstanding growth in recent quarters. Demand for its H100 Hopper AI GPUs was so solid that the chip reportedly commanded a waiting period of as long as a year. The company followed up this chip with the more powerful H200 processor, whose production ramp and shipments started in the previous quarter. Nvidia points out that the shipments of its Hopper-based GPUs will increase in the second half of the current fiscal year thanks to improved supply and availability, suggesting that the H200 could continue to bring in more business for the company. However, all eyes are set on Nvidia's next generation of AI chips based on the Blackwell platform. The company started sampling the Blackwell processors to customers last quarter. Nvidia says that the production ramp of the Blackwell chips will begin in the fourth quarter of the fiscal year. More importantly, Nvidia claims that the "demand for Blackwell platforms is well above supply, and we expect this to continue into next year." Additionally, CEO Jensen Huang recently told CNBC that Blackwell is witnessing "insane" demand. That's not surprising as the company has already lined up multiple customers that include the likes of Microsoft, OpenAI, Meta Platforms, and others for this chip that's reportedly going to deliver a 4 times jump in performance over the Hopper chips. Morgan Stanley estimates that Nvidia could sell $200 billion worth of Blackwell-based server systems next year. While that seems like an ambitious target, the pace at which Nvidia's data center revenue is growing suggests that it could indeed hit that mark. More specifically, Nvidia's data center revenue has more than tripled in the first six months of fiscal 2025 to $49 billion from $14.6 billion in the same period last year. The current run rate suggests that Nvidia could end the year with $98 billion in data center revenue. That would be more than double its fiscal 2024 data center revenue of $47.5 billion. Morgan Stanley's forecast suggests that Nvidia may be able to double its data center revenue once again in the next fiscal year. If that's indeed the case, the semiconductor giant's top line could land well ahead of the $178 billion revenue that analysts are expecting from the company next fiscal year. That could reignite Nvidia's stupendous rally once again following a flat performance in the past three months and could even help the stock go on a parabolic run. Snowflake is a cloud-based data platform provider on which customers store and consolidate data so that they can derive insights using that data, build applications, and even share that data. And now, Snowflake is adding AI-focused capabilities to its data cloud platform. The company has been renting GPUs so that it can "fulfill customer demand for our newer product features," suggesting that Snowflake's AI offerings are gathering momentum. Snowflake enables its customers to develop AI applications using large language models (LLMs) and deploy those models within the secure environment of its data cloud platform. Snowflake customers can build custom chatbots, use the company's Copilot feature to speed up their tasks and extract data from documents, among other things. Snowflake management pointed out on the August earnings conference call that more than 2,500 customers were using its AI offerings in its fiscal 2025's second quarter (ended July 31). It is worth noting that Snowflake ended the quarter with just over 10,000 customers, indicating that it is well-placed to upsell its AI services to a large customer base. The good part is that the growing adoption of its AI tools is leading to increased spending by existing customers. The company's net revenue retention rate stood at 127% in fiscal Q2, a metric that compares the spending by its customers at the end of a particular period to the spending by the same customer base in the year-ago period. So, a net revenue retention rate of more than 100% means that it is winning a bigger share of customers' wallets. Even better, the quality of Snowflake's customer base seems to be improving as well. This is evident from the fact that the number of customers who have generated more than $1 million in product revenue for the company increased by 28% year over year to 510 in the previous quarter, as compared to the 21% growth in the overall customer base. This combination of higher spending by its existing customers as well as the addition of new customers explains why Snowflake's remaining performance obligations (RPO) shot up a remarkable 48% year over year last quarter to $5.2 billion. That exceeded the 30% year-over-year growth in the company's product revenue. As RPO refers to the total value of a company's future contracts that are yet to be fulfilled, the faster growth in this metric as compared to its revenue growth suggests that Snowflake's revenue growth is likely to accelerate in the long run. Of course, the investments that the company is making are weighing on its margins, with its non-GAAP (adjusted) operating margin dropping to 5% last quarter from 8% in the year-ago period. That's why analysts are expecting Snowflake's bottom line to shrink to $0.61 per share in fiscal 2025 from $0.98 per share in the previous year. However, it is expected to return to terrific bottom-line growth from the next fiscal year. As such, investors should consider buying Snowflake stock while it is down, as the emergence of AI and the acceleration in its growth thanks to the adoption of this technology could send the stock flying.

Better Artificial Intelligence (AI) Stock: Nvidia vs. Palantir Technologies

Both companies have enjoyed stunning gains in 2024 thanks to AI, but they are trading at expensive valuations. Shares of Nvidia (NVDA 4.05%) and Palantir Technologies (PLTR 6.58%) have delivered stunning gains of 152% and 133%, respectively, in 2024, as both companies have been benefiting from the fast-growing adoption of artificial intelligence (AI) hardware and software. That is also why both of them are now trading at expensive valuations. However, a closer look at their prospects indicates that Nvidia and Palantir's AI-powered growth is here to stay, as both of them stand to gain from massive end-market opportunities. Here, let's examine which of these two AI stocks investors should consider buying right now following their stunning gains so far this year. The case for Nvidia Nvidia has been delivering robust growth quarter after quarter thanks to its market share of more than 85% in AI chips, which analysts at investment research firm Third Bridge believe is sustainable, thanks to the arrival of the company's next-generation Blackwell processors. Nvidia's revenue in the second quarter of fiscal 2025 (which ended July 28) shot up 122% year over year to $30 billion. More importantly, the company's pricing power helped it increase its non-GAAP (generally accepted accounting principles) gross margin by 4.5 percentage points last quarter to 75.7%. As a result, the growth in the company's bottom line outpaced its revenue growth. Nvidia reported $0.68 per share in earnings in fiscal Q2, an increase of 152% from the year-ago period. And now, analysts at Japanese investment bank Mizuho have raised their sales expectations of Nvidia's AI graphics cards for 2025. Mizuho is expecting Nvidia to sell 8% to 10% more AI graphics cards next year from its prior guidance issued in July. The company is expected to sell between 6.5 million to 7 million AI GPUs (graphics processing units) next year, driven by an improving supply chain that is expected to help it manufacture more chips. Given that Nvidia has reportedly priced its upcoming Blackwell processors between $30,000 to $40,000, which is identical to what it charges for its current generation flagship processor -- the H200 -- there is a solid chance its data center revenue could surge big time next year. Assuming Nvidia sells even 6 million of its AI GPUs in 2025 at an average selling price (ASP) of $30,000, it could generate a whopping $180 billion in revenue from the data center business next year. Moreover, its data center revenue could exceed $200 billion, at the higher end of Mizuho's shipment forecast. Given that Nvidia has generated close to $49 billion in revenue from the data center business in the first six months of the current fiscal year, which translates into an annual revenue run rate of $98 billion, investors can hope for another stellar year from this semiconductor giant next year. Consensus estimates are projecting Nvidia's revenue to hit $176 billion in fiscal 2026 (which will begin in January next year) from this year's level of $125 billion. NVDA Revenue Estimates for Current Fiscal Year data by YCharts However, if Nvidia can indeed manage to ship at least 6 million AI GPUs next year at the ASP discussed, it could very well coast past consensus expectations. As such, Nvidia could remain a top AI stock even after the stellar gains it has recorded in 2024. The case for Palantir Technologies Just like Nvidia is the dominant player in the AI hardware market, Palantir has been touted to be the leading provider of AI software platforms by market research firms. Forrester, for instance, recognizes Palantir as a leader in "artificial intelligence and machine learning (AI/ML) software platforms." Similarly, Dresner Advisory Services says that Palantir is a "top performer" in its AI, data science, and machine learning market study. With the AI platforms software market forecast to clock an annual growth rate of 40% through 2028, generating $153 billion in annual revenue, Palantir seems to be on the cusp of a major growth opportunity. More importantly, Palantir's growth rate has started improving as more customers have started deploying its Artificial Intelligence Platform (AIP) to integrate generative AI into their operations. The company's revenue in the first six months of 2024 increased by 23% from the same period last year. Its earnings have shot up fivefold over the same period to $0.10 per share. For comparison, Palantir's revenue in the first six months of 2023 increased at a slower pace of 15% from the year-ago period. Palantir management made it clear on the company's August earnings conference call that its AIP is leading to stronger deal activity by attracting new customers, and by also helping it gain more business at existing customers. According to Palantir chief revenue officer Ryan Taylor: One of the most notable indicators of our delivery is the volume of existing customers who are signing expansion deals, many of which are a direct result of AIP. The strong traction of Palantir's AIP has encouraged the company to raise its full-year guidance to just under $2.75 billion from the earlier expectation of $2.68 billion. Analysts, however, are expecting Palantir to deliver $2.76 billion in revenue in 2024, which would be a 24% increase from last year. However, it won't be surprising to see it post stronger growth than that because of a healthy revenue pipeline that stands at $4.3 billion (its remaining deal value at the end of Q2, a metric that refers to the total value of contracts it is yet to fulfill). Time to make a choice The points discussed indicate that both Palantir and Nvidia are heading into 2025 with sunny prospects, thanks to solid demand for their AI offerings. However, Nvidia is growing at a significantly faster pace than Palantir. Also, a look at the valuation of the two companies, Nvidia turns out to be the relatively cheaper bet. NVDA PE Ratio data by YCharts Investors should also note that Nvidia is possibly straddling Palantir's territory, as Nvidia has been witnessing solid traction in its software business. So, based on the valuation, the pace of growth, and Nvidia's moat in AI hardware and its focus on diversifying into the software side, it looks like the better AI investment of the two high-flying companies discussed here.

Better Artificial Intelligence Stock: Nvidia vs. Broadcom | The Motley Fool

Which of these chipmakers is the better play on the booming AI market? Nvidia (NVDA 4.05%) and Broadcom (AVGO 3.23%) represent two different ways to invest in the booming artificial intelligence (AI) market. Nvidia is the world's leading producer of high-end GPUs, which are used to process complex AI tasks in data centers. Broadcom's chipmaking business sells the networking and optical chips for transferring all of that data. Over the past three years, Nvidia's stock soared about 510% as Broadcom's stock advanced more than 260%. The benchmark PHLX Semiconductor Sector index only rallied roughly 60% during the same period. Let's see why these two hot chipmakers outperformed their industry peers -- and which stock is the better buy right now. Nvidia once generated most of its revenue from gaming GPUs for PCs. However, the rapid expansion of the AI market turned its data center business into its largest and fastest-growing business. It generated 87% of its revenue from its data center chips in its latest quarter, and that segment should remain its core growth engine. All of the world's top AI software companies -- including OpenAI, Microsoft, Meta Platforms, and Alphabet's Google -- run their services on Nvidia's chips. Nvidia is clearly the top vendor of picks and shovels for the AI gold rush, and the market's demand is consistently outstripping its available supply. From fiscal 2024 to fiscal 2027 (which ends in January 2027), analysts expect its revenue to grow at a stunning compound annual growth rate (CAGR) of 50% as its EPS increases at a CAGR of 56%. Trading at 34 times next year's earnings, Nvidia's stock still looks reasonably valued relative to its growth potential. But investors shouldn't overlook the potential macro, competitive, and regulatory challenges. An economic downturn drives many companies to rein in their purchases of Nvidia's pricey data center GPUs. As for the competition, Advanced Micro Devices could creep up on Nvidia with its cheaper data center GPUs, and most of Nvidia's largest customers have already been developing their own AI accelerators. Tighter trade restrictions on advanced AI chips could also reduce its sales in China to a trickle. Nvidia is a great investment if you believe the AI market will keep expanding. But if you think it's a bubble on the verge of popping, it might be a risky play. Broadcom, which was known as Avago before it acquired the original Broadcom and inherited its brand in 2016, operates two main businesses. Its semiconductor business sells chips for the mobile, wireless, networking, data storage, and industrial markets. Its infrastructure software business -- which it expanded with its acquisitions of CA Technologies, Symantec's enterprise security division, and VMware -- provides on-premise and cloud-based software for large companies. In its latest quarter, Broadcom generated 56% of its revenue from its semiconductor business and the remaining 44% from its infrastructure software business. For fiscal 2024 (which ends this October), the company expects its sales of AI-oriented chips to roughly triple to $12 billion, or nearly a quarter of its projected revenue for the full year. It expects that rapid growth to offset its slower sales of non-AI chips and infrastructure software. Those slower-growth businesses should also warm up again as the macroeconomic environment improves. That diversification makes Broadcom a more balanced tech company that isn't as tightly tethered to the AI market as Nvidia. But it's also growing at a slower rate. From fiscal 2023 to fiscal 2026, analysts expect its revenue to rise at a CAGR of 24% as its EPS increases at a CAGR of 18%. It also trades at 44 times next year's earnings, which makes it seem a bit pricier than Nvidia. On an adjusted basis (which excludes its acquisition-related expenses), it looks more reasonably valued at 29 times forward earnings. Broadcom's forward dividend yield of 1.2% is also a lot higher than Nvidia's paltry forward yield of 0.03%. Nvidia and Broadcom are both great long-term investments. But if you want to fully profit from the secular expansion of the AI market, Nvidia is the more obvious play. It will remain the top provider of AI accelerator chips for the foreseeable future, it has incredible pricing power, and its stock doesn't seem overvalued yet. Broadcom is a more balanced and diversified play on the semiconductor and software markets, but a lot of its recent growth has been driven by its massive acquisitions. It's made a lot of smart investments so far, but it could eventually "di-worsify" its business and take on too much debt with that ambitious inorganic expansion. So if you want a simpler way to invest in the AI market, it's still smarter to buy Nvidia instead of Broadcom.

Nvidia's Top Brass Unloaded Significant Stock In 2024 Amid AI Spending and Chip Delays - NVIDIA (NASDAQ:NVDA)

Nvidia stock up 179% in the past year despite recent insider selloff. Throughout 2024, Nvidia Corp. NVDA insiders have been actively selling shares, tallying transactions over $1.8 billion, with expectations of more to come, Bloomberg reports. The most notable of these insiders, CEO Jensen Huang, executed sales of approximately $713 million through a predetermined trading arrangement known as a 10b5-1 plan. Director Mark Stevens' trust has filed to sell 3 million additional shares in addition to the 1.6 million it sold in 2024. This massive wave of stock sales occurs amid market anxieties surrounding Nvidia's delayed Blackwell chips and ongoing investments in AI technology. Despite these concerns, insiders maintain a robust holding, illustrating a potentially strategic timing rather than a loss of confidence. Still, Nvidia stock is up 179% in the last 12 months, and its outstanding shares stand at 23.5 billion. Also Read: Amazon's Profitable Essential Merchandise, Efficiency Gains Set To Drive Growth: Analyst Recently, Nvidia Corp NVDA chief Jensen Huang dispelled Wall Street concerns by acknowledging massive demand for Nvidia's Blackwell GPU, whose production and progress are going as planned. Meanwhile, Nvidia is applying spatial AI in autonomous driving and warehouse automation, using robots to simulate real-world scenarios. Nvidia's recent launches include open-source AI models and new Unreal Engine 5 plugins enabling AI-powered MetaHuman characters, catering to AI-driven gaming. Wedbush analyst Dan Ives projected Nvidia as a beneficiary of the trillion-dollar AI spending by the U.S. hyperscalars. Investors can gain exposure to Nvidia through SPDR S&P 500 SPY and iShares Core S&P 500 ETF IVV. Nvidia Stock Prediction For 2024 Equity research analysts on and off Wall Street typically use earnings growth and fundamental research as a form of valuation and forecasting. But many in trading turn to technical analysis as a way to form predictive models for share price trajectory. Some investors look to trends to help forecast where they believe a stock could trade at a certain point in the future. Looking at NVIDIA, an investor could make an assessment about a stock's long term prospects using a moving average and trend line. If they believe a stock will remain above the moving average, which many believe is a bullish signal, they can extrapolate that trend into the future using a trend line. For NVIDIA, the 200-day moving average sits at $95.76, according to Benzinga Pro, which is below the current price of $122.85. For more on charts and trend lines, see a description here. Traders believe that when a stock is above its moving average, it is a generally bullish signal, and when it crosses below, it is a more negative signal. Investors could use trend lines to make an educated guess about where a stock could trade at a later date if conditions remain stable. Price Action: NVDA stock is up 0.39% at $123.33 premarket at the last check Friday. Also Read: Taiwan Semiconductor Has Soared 96% But Geopolitical Risks Persist Image via Shutterstock Market News and Data brought to you by Benzinga APIs

These Are the 3 Fastest-Growing Artificial Intelligence (AI) Stocks | The Motley Fool

What's driving explosive growth in the AI sector? These are three high-octane growth stories in the artificial intelligence sector. There are many ways to define "the fastest-growing" stocks. You can focus on market returns, sales growth, or profits, and you can look at proven results or future expectations. Traditionalists may prefer analyzing reported results and historical market data. Growth-oriented investors can lean into forward-looking projections, based on rapid top-line growth or beefy long-term profit targets. Today, I'm looking at the fastest-growing artificial intelligence (AI) stocks of the last three years, in terms of estimated revenue growth. This way, I'll zoom in on companies with plenty of business growth expected in the years ahead, no matter what they did in the early days of the generative AI boom. So here are the top three names of that analysis, based on their top-line sales' expected compound annual growth rate (CAGR) in the next three years. It's no secret that semiconductor designer Nvidia (NVDA 4.05%) has grown like wildfire in recent years. Its trailing 3-year revenue growth stands at a spine-chilling CAGR of 63.8% at the moment. OpenAI introduced its groundbreaking ChatGPT system in November 2022. As the primary provider of AI accelerator hardware for that platform, Nvidia has enjoyed skyrocketing sales ever since. And analysts see no end to that trend. Your average analyst firm expect Nvidia to deliver annual sales growth of roughly 50.4% over the next three years. I agree that Nvidia should deliver strong sales growth in this AI boom. However, it gets harder and harder to maintain these skyrocketing growth rates as the base figure for each year-over-year comparison increases. Moreover, I'm not convinced that the analyst community gives enough respect to Nvidia's current and potential rivals. If nothing else, having plenty of high-powered AI accelerator chips available could limit Nvidia's gross profit margins over time. So Nvidia looks overpriced to me, since Wall Street's growth targets seem a bit too optimistic. I cashed in some of my paper gains on this stock several months ago. Yet, the analysts might be right. I'd be kicking myself if Nvidia continues to dominate the AI hardware space and my portfolio had no connection to that opportunity. You should check your risk tolerance before backing away from Nvidia's soaring stock -- or doubling down on it. Nvidia is the leading seller of AI accelerator chips, and Super Micro Computers (SMCI -5.01%) sells a ton of custom server systems using those chips. As a result, Supermicro's sales growth is trailing slightly behind Nvidia's. In an alternate universe where this was the only builder of AI servers, Supermicro could have shown growth equal to or even greater than Nvidia's. In this world, Supermicro started this surge from a much lower revenue level than Nvidia, as is currently raising its long-term growth rate faster. Supermicro stands out in the system-building market with a combination of unique cooling solutions and relatively low system prices. That being said, Supermicro's target market is even more fragmented than Nvidia's. Hewlett Packard Enterprise (HPE 0.53%) and Dell (DELL 2.38%) sell far more servers than Supermicro, even in the AI server niche. On the upside, this situation gives Supermicro more room to take market share from rivals, outgrowing its peers in the process. On the downside, the HPs and Dells out there won't simply stand back and let Supermicro win. So this is another challenging growth target. At the same time, Supermicro comes with lofty valuation ratios for this subsector. As such, it's far from my favorite buying idea among AI stocks. Finally, network security and performance specialist Cloudflare (NET 1.58%) trails behind Supermicro's revenue growth due to a significant slowdown in the last two years. Cloudflare isn't a pure-play AI investment, but the company has strong ties to the emerging AI space. You can already buy AI-oriented edge computing services directly from Cloudflare, using its global network of servers and AI accelerators to deliver results near the end user. Its cybersecurity and network acceleration features are also quite valuable for AI service providers. For example, ChatGPT's services always pass through Cloudflare's content delivery and data security tools. So Cloudflare is a serious AI investment with robust revenue growth. The company is also boosting its AI computing infrastructure over time. Meanwhile, Cloudflare recently revamped its sales department, boosting both its revenue growth per sales agent and operating margin. The stock is far from cheap, but Cloudflare is perhaps the most convincing long-term growth story on this list. This company is pulling several levers to keep the growth fires burning, and the best chapters of Cloudflare's story may still be unwritten.

What's Going On With Nvidia Stock On Thursday? - NVIDIA (NASDAQ:NVDA)

Nvidia applies spatial AI in autonomous driving and warehouse automation, using robots to simulate real-world scenarios. Nvidia Corp NVDA is advancing technology beyond the digital space, pushing the boundaries of spatial artificial intelligence (AI) and robotics to bring the focus back to the physical world. Nvidia's Vice President of Omniverse and Simulation Technology, Rev Lebaredian, told CNBC the real revolution lies in how AI interacts with the physical world. At the core of Nvidia's efforts is the Omniverse platform, where Lebaredian and his team develop precise digital replicas of real-world environments. Also Read: Nvidia Expands AI Offerings with New Open-Source Models and Unreal Engine 5 Plugins Lebaredian told CNBC creating intelligent robots starts by accurately representing the physical world inside a computer. Nvidia is applying the technology in autonomous driving, visual assistance, and warehouse automation, where robots can simulate real-world scenarios in virtual spaces. The stock is trading upwards on Thursday after the U.S. enacted reforms to boost the semiconductor sector. Under a fresh ruling, the U.S. government fast-tracked the progress of particular U.S. Chips Act beneficiaries by exempting them from federal environmental reviews. The legislation followed the U.S. Fed rate cut to spur discretionary spending. Nvidia chief Jensen Huang debunked Wall Street concerns by acknowledging huge demand for Nvidia's Blackwell GPU, which is in full production and progressing as planned. Nvidia stock is up over 173% in the last 12 months despite losing over 6% in the previous five days. Investors can gain exposure to Nvidia through Invesco Semiconductors ETF PSI and SPDR S&P Semiconductor ETF XSD. Will Nvidia Stock Go Up? When trying to assess whether or not NVIDIA will trade higher from current levels, it's a good idea to take a look at analyst forecasts. Wall Street analysts have an average 12-month price target of $152.69 on NVIDIA. The Street high target is currently at $200.0 and the Street low target is $90.0. Of all the analysts covering NVIDIA, 33 have positive ratings, 2 have neutral ratings and no one has negative ratings. In the last month, 2 analysts have adjusted price targets. Here's a look at recent price target changes [Analyst Ratings]. Benzinga also tracks Wall Street's most accurate analysts. Check out how analysts covering NVIDIA have performed in recent history. Stocks don't move in a straight line. The average stock market return is approximately 10% per year. NVIDIA is 155.38% up year-to-date. The average analyst price target suggests the stock could have further upside ahead. For a broad overview of everything you need to know about NVIDIA, visit here. If you want to go above and beyond, there's no better tool to help you do just that than Benzinga Pro. Start your free trial today. Price Action: NVDA stock is up 3.54% at $123.07 at the last check Thursday. Also Read: AMD Chief Predicts Custom Chips Will Outperform GPUs, Sees Shift in AI Chip Demand: Report Image via Shutterstock Market News and Data brought to you by Benzinga APIs