Nvidia's AI Dominance Fuels Record Growth and Market Leadership

2 Incredibly Simple Reasons to Buy Nvidia Stock Hand Over Fist Before Nov. 20 | The Motley Fool

These recent developments indicate that Nvidia's rapid growth is here to stay. Nvidia's (NVDA 4.07%) artificial intelligence (AI)-powered surge has continued in 2024. Cloud service providers, governments, and anyone looking to jump on the AI bandwagon have been lining up to buy the company's graphics processing units (GPUs) to train and deploy AI models. Shares of the semiconductor bellwether are up 173% this year. A closer look at recent developments in the AI ecosystem will tell us that the stock's surge is likely to continue, with the company's upcoming fiscal 2025 third-quarter earnings likely to act as a catalyst. The chipmaker will release its fiscal Q3 results (for the three months ended Oct. 27) on Nov. 20. Let's see why it may be a good idea to buy this high-flying AI stock before its earnings are released. Nvidia competes in the AI chip market with Advanced Micro Devices (NASDAQ: AMD) and Intel (NASDAQ: INTC). However, AMD's latest results indicate that it is nowhere near Nvidia in the market for AI graphics processing units (GPUs). In Q3 2024, AMD's data center business recorded a 122% year-over-year spike in revenue to $3.5 billion. For comparison, Nvidia's data center revenue in the second quarter of fiscal 2025 (which ended in July) was much higher at $26.3 billion. What's worth noting here is that Nvidia's data center revenue jumped a stunning 154% year over year in the last reported quarter, despite its big size. Moreover, AMD sells both server GPUs and central processing units (CPUs), but it has not been able to gain as much traction in the AI chip market as Nvidia has managed. Intel, meanwhile, remains further behind. It was originally expecting to sell $500 million worth of AI GPUs this year. However, on its latest earnings conference call, Intel management pointed out that the "overall uptake of Gaudi has been slower than we anticipated." As a result, Intel won't be able to hit its $500 million revenue target this year, suggesting that it won't be causing Nvidia much trouble. AMD, on the other hand, expects AI GPU sales of $5 billion in 2024. Those numbers are way lower than the value of AI GPUs Nvidia sells in just one quarter and confirm that Nvidia continues to remain the dominant force in the AI chip market. After all, at the current revenue run rate, Nvidia could end the current year with $84 billion in AI GPU revenue. If you add up the potential AI GPU revenue forecasts of Nvidia, AMD, and Intel, it becomes evident that Nvidia is controlling more than 90% of this market right now. More importantly, its competitors haven't been able to make any significant inroads in the AI chip market even after two years. As such, Nvidia remains in a terrific position to corner most of the spending on AI GPUs. The data center AI accelerator market is forecast to hit $500 billion in annual revenue in 2028, according to AMD's estimates, and Nvidia's rock-solid market share means that it is in pole position to make the most of this market. Another key theme that has emerged from the latest earnings reports of big technology players such as Meta Platforms (NASDAQ: META) and Microsoft (NASDAQ: MSFT) is that they will continue to spend big bucks on building AI infrastructure. Meta Platforms, for instance, has raised the lower end of its capital expenditure (capex) forecast for 2024. It now expects to spend between $38 billion and $40 billion in capex this year, as compared to the earlier range of $37 billion to $40 billion. However, the company has also added that it expects "a significant acceleration in infrastructure expense growth next year." Meta CEO Mark Zuckerberg points out that the company's AI efforts will require more investment if the company is to make the most of this technology. On the latest earnings conference call, Zuckerberg pointed out: First, it's clear that there are a lot of new opportunities to use new AI advances to accelerate our core business that should have strong ROI over the next few years. So, I think we should invest more there. And second, our AI investments continue to require serious infrastructure, and I expect to continue investing significantly there too. Microsoft is also spending a ton of money on AI infrastructure. Its capex in the first quarter of fiscal 2025 came in at $20 billion, which was a significant jump over the $11.2 billion it spent in the same quarter last year. It's worth noting that Microsoft spent $55.7 billion in capex in fiscal 2024, and the company's fiscal 2025 Q1 outlay points toward a significant acceleration on this front. In fact, Microsoft management says that it expects "capital expenditures to increase on a sequential basis given our cloud and AI demand signals." All this tells us that the demand for AI hardware is going to remain strong and help Nvidia sustain the impressive growth it's been clocking. Consensus estimates compiled by Yahoo! Finance are projecting Nvidia to deliver $32.9 billion in fiscal Q3 revenue when it releases its quarterly report later this month. The company's earnings are expected to double on a year-over-year basis to $0.74 per share. The chipmaker guided for $32.5 billion in revenue at the midpoint when it released its previous results in August, which means that analysts are expecting stronger growth from the company. The continued strength in AI hardware demand, along with the capacity expansion efforts of Nvidia's manufacturing partner, indicate that it could end up exceeding consensus estimates, a scenario in which this high-flying AI stock could get a nice shot in the arm. Given that Nvidia is now trading at an attractive 35 times forward earnings as compared to the U.S. technology sector's average of 45, investors have another solid reason to buy this stock before it releases its quarterly results on Nov. 20.

Nvidia Is Clear Winner In a Lackluster Big Tech Earnings Season

(Bloomberg) -- Results from tech giants largely underwhelmed this earnings season -- but they included plenty of good news for Nvidia Corp. The chipmaker's biggest customers, including Microsoft Corp., Alphabet Inc., Amazon.com Inc. and Meta Platforms Inc., all pledged to pump more into capital spending in the year ahead. The four firms plowed a combined $59 billion into data center gear and other fixed assets in the third quarter, marking a quarterly record, according to data compiled by Bloomberg. "If you're owning Nvidia, the big buyers out there need to keep buying and every quarter they need to buy more," said Mike Bailey, director of research at Fulton Breakefield Broenniman. "You can check that box." The tech giants' spending plans were just what bulls were looking for to keep Nvidia's stock rally going. The stock has nearly tripled this year, and rose 4.1% to close at a record on Wednesday amid broad stock-market gains in the wake of Donald Trump's election win. The Santa Clara, California-based maker of AI chips overtook Apple Inc. this week to again become the world's most valuable company. Big tech earnings also paint a rosy picture ahead of Nvidia's own results, scheduled for Nov. 20. Nvidia shares shed nearly $900 billion in market value from a June peak to an August low amid questions about returns on investments in AI and delays for its new Blackwell chips. They've since rebounded, helped by reassurances from Chief Executive Officer Jensen Huang that Blackwell production is on track. The latest evidence of robust AI spending has further eased concerns. Wall Street analysts are overwhelmingly positive on Nvidia, with 67 of the 75 analysts tracked by Bloomberg rating the stock a buy. They've also continued to boost estimates, with profit forecasts for next year up about 10% over the past three months, according to data compiled by Bloomberg. That's helped temper Nvidia's valuation, which is now around 39 times forward earnings, down from last year's peak of more than 60 times. William Blair analysts Sebastien Naji and Jason Ader are among those that have boosted fiscal 2026 estimates, writing in a recent note that "our confidence in Nvidia's ability to maintain its market-leading position for AI infrastructure has only been reinforced." It appears to be "full-throttle ahead" for AI, they said. UBS Wealth Management estimates that annual spending by big tech firms on AI will rise by 50% this year, to $222 billion, and then increase another 20% in 2025. "Microsoft, Alphabet, Amazon, and Meta account for almost half of all AI spending, and their strong balance sheets and willingness to invest will likely continue to support strong growth in AI spending," said Solita Marcelli, chief investment officer Americas at UBS Global Wealth Management. Investors should "take advantage of near-term volatility to build up sufficient exposure to quality AI stocks," she said. Tech Chart of the Day Lyft Inc.'s new strategy of attracting more commuters seems to be working. Shares in the ride-hailing service rallied more than 20% in premarket trading on Thursday after it issued strong guidance for both this quarter and the full year. The results came as a relief to investors after larger rival Uber Technologies Inc. reported disappointing results in late October.

Meet the Supercharged Growth Stock That Could Make You a Millionaire | The Motley Fool

This stock made investors millionaires in the past, and it could still find a place in a million-dollar portfolio. Buying and holding solid companies for the long run is a smart investment strategy as it allows investors to benefit from the power of compounding, while also allowing them to capitalize on disruptive trends that tend to shape our lives. Nvidia (NVDA 4.07%) has turned out to be one such stock over the past decade. More specifically, an investment of just $3,700 made in Nvidia a decade ago is now worth $1 million. The stock's stellar rise during this period has been fueled by multiple growth trends such as the growing adoption of graphics cards in personal computers (PCs) and workstations, the increasing integration of semiconductors within vehicles, cryptocurrency mining, and the booming demand for cloud computing applications where its graphics processing units (GPUs) are coming in handy. Thanks to these catalysts, Nvidia is (at the time of this writing) the world's largest company with a market cap of $3.58 trillion. Expecting Nvidia to replicate the phenomenal gains that it recorded over the past decade over the next 10 years as well would be absurd given how big it has become already. After all, a 270x jump from current levels would put Nvidia's market cap at a whopping $966 trillion, which would be illogical considering that the global gross domestic product (GDP) is forecast to hit $139 trillion in 2029, growing at a compound annual rate of less than 5% (from 2023 levels of $105 trillion). Still, Nvidia could turn out to be a solid pick for investors looking to construct a million-dollar portfolio considering that it still has a lot of room for growth. Here's a closer look at some of Nvidia's end-market opportunities that could help this semiconductor stock sustain its red-hot run for a long time to come. Nvidia stock received a massive boost in the past couple of years thanks to its dominant position in the GPU market, as these chips are being deployed in huge numbers in data centers for AI training and inference. Nvidia's GPUs are used by all the major cloud computing providers, including Microsoft, Alphabet, Amazon, and Meta Platforms. Governments across the globe are also buying Nvidia chips to fuel their AI ambitions. This puts Nvidia in a solid position to maintain outstanding growth over the next decade. That's because the size of the global GPU market is expected to jump from $56 billion last year to $1.4 trillion in 2034, according to Precedence Research. Nvidia reportedly commands somewhere between 70% and 95% of the AI GPU market, according to Mizuho Securities (as reported by CNBC). More importantly, Nvidia leaves its AI chip rivals in the dust thanks to its early move into this niche, as well as the company's ability to stay ahead technologically. As a result, it is not surprising analysts are expecting Nvidia's data center business to grow rapidly based on the robust demand for its AI chips. Nvidia also dominates the market for GPUs that are deployed in computers and workstations. Jon Peddie Research (via Tom's Hardware) points out that Nvidia controls a whopping 88% of the market for discrete GPUs that are used in computers. This should open another terrific long-term growth opportunity for Nvidia as the adoption of AI-enabled PCs is set to grow at an incredible pace. Nvidia is expected to generate an estimated $125.6 billion in revenue in the current fiscal year as per consensus estimates compiled by Yahoo! Finance. That would be an increase of 125% from the previous fiscal year, and the massive revenue opportunity present in the GPU market suggests that Nvidia may be able to keep growing at a healthy rate in the long run. However, Nvidia has other lucrative growth opportunities as well where it is making solid progress. Nvidia has been looking to diversify itself by entering the enterprise software market. On its August earnings conference call, management pointed out that its software, software-as-a-service (SaaS), and support revenue should hit a $2 billion annual revenue run rate by the fourth quarter of fiscal 2025. That would be double the $1 billion revenue run rate this business recorded in the fourth quarter of fiscal 2024. It is easy to see why Nvidia has been able to double this segment's growth rate in the past year. The company offers software platforms to enterprises to help them build and deploy generative AI applications. There is a solid chance of Nvidia's enterprise AI software offerings gaining more momentum as they allow enterprise customers to build, deploy, and customize AI models without having to break the bank. As a result, Nvidia could be on its way to tapping a massive opportunity in the AI software market, a space that's expected to generate a whopping $391 billion in revenue in 2030 as per ABI Research. Meanwhile, the rapidly growing adoption of digital twins could unlock another tremendous opportunity for the chipmaker. A digital twin is a virtual representation of a real-world physical object or process, and it is being adopted by several companies to improve the efficiency of their processes and factories. Nvidia has been gaining good traction in this market, with management pointing out on the previous earnings conference call that companies such as Foxconn, Mercedes-Benz, and WPP are some of the global enterprises tapping its solutions to build digital twins. Again, this is another potentially huge opportunity for Nvidia as Precedence Research estimates that the digital twin market could be worth $383 billion in 2033 as compared to $14 billion in 2023. We have already seen that Nvidia is on track to earn $125 billion in revenue this year. Investors should note that the company estimated a total addressable market (TAM) of $1 trillion on its investor day in March 2022. However, that figure is likely to have moved higher. CEO Jensen Huang remarked recently that the company sees a $1 trillion revenue opportunity in the data center space alone thanks to the transition to accelerated computing from general-purpose computing (done using central processing units). Given that accelerated computing is enabled by the GPUs that Nvidia sells and a market that it currently dominates, its TAM is likely to be much bigger right now. All this probably explains why there are expectations on Wall Street that Nvidia could achieve a $10 trillion, or even a $50 trillion valuation in the future. Consensus estimates are also upbeat about Nvidia's prospects, expecting its earnings to increase at an annual run rate of 57% for the next five years. As such, it won't be surprising to see this supercharged growth stock continuing its red-hot stock market momentum in the long run. That's why investors looking to make a million-dollar portfolio can consider buying it even after the outstanding gains it has delivered in the past decade.

Why Nvidia Stock Rallied to a New All-Time High on Wednesday | The Motley Fool

Shares of Nvidia (NVDA 4.48%) surged higher on Wednesday, jumping as much as 4.7% to a new all-time high. As of 3:02 p.m. ET, the stock was still up 4.62%. The catalyst that sent the chipmaker and artificial intelligence (AI) specialist higher was the outcome of the U.S. presidential election and what it means for the future of AI. There's no denying the impact of AI on the stock market over the past couple of years, and Nvidia has been a prime example. The company's graphics processing units (GPUs) have become the gold standard for supplying the computational horsepower required to train and run generative AI models. This, in turn, has fueled five consecutive quarters of sales and profit growth of 100% or more. Wedbush analyst Dan Ives released a missive in the wake of the election results, saying he expects "a strong AI focus out of the gates from Trump for U.S. Big Tech players." He went on to posit that "AI initiatives will ramp in the U.S. ... [which] would be a major tailwind" for players in the space." Analysts at UBS echoed those thoughts, noting that "AI adoption and monetization have picked up further." They went on to say that thanks to big tech's AI-related spending spree, "the growth story of AI remains robust." As the de facto poster child for advances in AI, what's good for AI is certainly good for Nvidia. To be clear, investors shouldn't expect the triple-digit growth that Nvidia has delivered in each of the past five quarters, but its results will be robust, nonetheless. For its fiscal 2025 third quarter (ended Sept. 29), management is guiding for revenue of $32.5 billion, which would represent growth of 79%, with a commensurate uptick in profits. Furthermore, the upcoming release of its next-generation Blackwell AI-centric processor has already seen extraordinary demand, according to Nvidia, which bodes well for the future. At 34 times forward earnings, Nvidia stock isn't exactly cheap, but given the company's position as the leading provider of AI chips, I would argue it's worth every penny.

3 Reasons Buying This Artificial Intelligence (AI) Stock Is a Risk... And How It Could Pay Off | The Motley Fool

Is now the right time to invest in a top AI player? Let's explore the risks and rewards of buying this market darling in the fall of 2024. It's no secret that Nvidia (NVDA 2.75%) is making a mint in the artificial intelligence (AI) market. Its AI accelerator chips are the pick of the litter for high-end AI-training systems, and those systems are in high demand these days. Nvidia's stock is a very direct bet on a long-running AI boom. It's not necessarily a slam-dunk winner, and investors should keep a couple of big risks in mind before buying these shares. But there is a world where Nvidia comes up aces and continues to outperform the stock market. So let's take a quick look at Nvidia's investment risks and what it would take to keep the market-beating party going. It's true that Nvidia got the jump on the competition. OpenAI's first public version of ChatGPT was trained on more than 10,000 Nvidia V100 accelerators. Later versions of the same large language model (LLM) training setup will use many more units of newer, more powerful, and more expensive accelerator chips. Nvidia's financial charts show a sharp inflection point (aka "hockey-stick" moment) when it started to fill orders inspired by the ChatGPT release: Every chip design comes with a different balance of performance, price, power and cooling requirements, and unique features. Intel even brings its own manufacturing facilities to the game, dodging the potential bottleneck of every fabless designer jockeying for time on the usual manufacturing lines. Nvidia is on top so far, but who's to say what chip designer might win the next generation's most lucrative design contracts? If the answer isn't Nvidia, its investors could be in for a sharp price correction. You see, Nvidia's stock has skyrocketed in the ChatGPT era. The stock has gained 928% in two years and 216% in the last 52 weeks. With a $3.4 trillion market cap, Nvidia's stock trades at the lofty valuation ratio of 74 times free cash flows or 36 times sales. This is the typical market performance of a young, hungry growth stock with big dreams and a small market cap. The company will have to deliver tremendous sales growth and profits for years to come in order to earn this gigantic market value. Any misstep along the way could lead to a sudden price drop -- either right away or when investors have taken their time digesting the long-term implications of negative news. Despite its massive market cap and soaring sales, Nvidia doesn't run the world. Economic downturns could take the wind out of the AI boom's sails. Nvidia's chosen design priorities might be less popular than some other chipmaker's AI products in a later (and more lucrative) product generation. Regulators in key markets like China and the U.S. may set up firewalls against international trade, undermining Nvidia's business prospects. Natural disasters have the power to disrupt Nvidia's supply chains. International conflicts can have the same effect, while also challenging the global economy. Nvidia doesn't have direct control over these issues. There is no such thing as a risk-free investment, no matter how well-positioned the company might be and how flawless the management team's business plan is. Unexpected events can always throw a spanner in the works, and that's bad news for high-flying market darlings. But Nvidia is a market darling for good reason. The chart above showed you how revenue, earnings, and free cash flow results are soaring in the generative AI boom. The valuation ratios are high, but sharply lower than their peaks in the summer of 2023 -- the business results are keeping pace with the investor enthusiasm. And you should certainly mind the competition risk, but Nvidia is still the silverback gorilla to beat in the AI hardware market. Challengers have a lot of work to do, both in the chip-design labs and the marketing department. I mean, Nvidia is stealing Intel's spot in the Dow Jones Industrial Average (^DJI 0.94%) market index, reflecting a sea change in the semiconductor industry. And the incoming cash profits won't sit idle in some bank account. Nvidia's product development budgets are suddenly among the world's most generous, giving the company many new tools for defending its dominant market position. So I understand why Nvidia is a popular investment idea at today's rich prices and despite many business risks. The company's footprint on the AI market is inspiring, and those beefy cash profits should help Nvidia perform in the long run. And the stock has been very good to my own portfolio. I took some profits in February, but left more than half of my position untouched. I'm not buying Nvidia stock at these prices, which look a bit too generous in the context of the risks noted earlier. But I'm happy to hold the remaining shares and see how the AI market plays out over the next few years. A small Nvidia position is almost mandatory for growth investors in 2024.

Nvidia Is Falling Today -- Is This an Opportunity to Buy the Artificial Intelligence (AI) Stock? | The Motley Fool

Nvidia stock is losing ground following recent quarterly reports from Microsoft and Meta Platforms, both of which are key customers. While Microsoft and Meta Platforms each delivered quarterly sales and earnings figures that came in ahead of Wall Street's expectations, the tech giants issued forward guidance that fell short of some targets. Microsoft and Meta Platforms are key players in the artificial intelligence (AI) space, and the two companies are also top customers for Nvidia. As a result, their sales, earnings, and guidance can have a significant impact on the graphics processing unit (GPU) leader's share price. But while these key customers issued sales and spending guidance that has prompted pullbacks for their stocks and the market at large today, details in their reports actually suggest positive demand catalysts for Nvidia. Microsoft and Meta's respective sales guidance for the current quarter fell short of high-end expectations on Wall Street. On the other hand, both companies indicated that they will continue spending aggressively on AI hardware. For example, Meta Platforms raised its capital expenditures (capex) guidance for the year to between $38 billion and $40 billion -- up from previous guidance for capex between $37 billion and $40 billion. Meanwhile, Microsoft said that it expected its capex to increase on a sequential quarterly basis as it continues to build up its cloud and AI infrastructure. As the leading provider of GPUs used for advanced artificial intelligence systems, Nvidia is poised to see strong sales momentum in conjunction with rising AI hardware spending from big tech companies. So while recent earnings reports from Microsoft and Meta Platforms have spurred bearish momentum for the market today, key details in their quarterly updates actually support the bullish case for Nvidia. If you're looking to build a position in the AI hardware leader's stock, today's pullback could be a worthwhile buying opportunity.

Nvidia Stock Prices to Watch as AI Darling Becomes World's Most Valuable Company

Nvidia (NVDA) this week surged into the top position among the world's most valuable companies by market capitalization, surpassing iPhone maker Apple (AAPL). The AI chipmaker's shares gained about 4% on Wednesday, hitting a record high of $146.49, as U.S. equities soared following the election of Donald Trump as president. Nvidia shares have risen nearly three-fold since the start of the year amid insatiable demand for the company's family of AI chips, including its next generation Blackwell graphics processing units (GPUs). Below, we analyze the technicals on Nvidia's chart and identify important price levels that investors may be watching. Since breaking out from a symmetrical triangle last month, Nvidia shares have traded mostly sideways to higher as investors look for future catalysts that may drive the AI favorite's next move. It's worth pointing out that in recent months, the stock's volume has tracked steadily lower, potentially indicating that larger market participants remained on the sidelines ahead of the US election and amid uncertainty over chip export curbs. Looking ahead, investors should monitor for increasing share turnover while eyeing these important price levels on Nvidia's chart. The first lower level to watch sits at $144, an area on the chart just below Wednesday's closing price where the shares may encounter support near a period of consolidation positioned around the prior all-time high (ATH). Further selling could see Nvidia shares fall to around $125, an area on the chart where they currently find support near the closely watched 50-day moving average and symmetrical triangle's upper trendline. A breakdown below this level could see the stock fall to the $97 region. Investors may seek entry points at this location near a trendline joining two March peaks with a series of prices positioned around the early-August low. To forecast a higher level using technical analysis, we can apply the measuring principle, often referred to as a measured move. This technique works by calculating the distance between the symmetrical triangle's two trendlines near their widest point and adding that amount to the initial breakout area. In other words, we add $55 to $125, which projects an upside target of $180. The comments, opinions, and analyses expressed on Investopedia are for informational purposes only. Read our warranty and liability disclaimer for more info.

Why Nvidia Stock Is Sinking Today | The Motley Fool

The catalysts that sent the chipmaker lower were the most recent reading on inflation and a report that a key artificial intelligence (AI) supplier could become a rival. The first factor weighing on Nvidia stock was the most recent report on inflation. Prices inched higher in September, according to the latest report released by the U.S. Department of Commerce. Personal consumption expenditures, the Federal Reserve Bank's favored gauge of inflation, rose 2.1% year over year, or at a seasonally adjusted rate of 0.2%. Both measures were in line with economists' estimates. Stripping out the volatile food and energy prices put the rate at 2.7%. While an improving read on inflation should be considered good news, it also increases the likelihood that the Fed could pause its campaign of interest rate cuts when it meets next week. It's also been suggested that Softbank (SFTB.Y -3.93%) is planning to use Arm Holdings (ARM -8.50%) technology to power "a new network of data centers, purpose-built to train and run AI systems," according to a report in the Financial Times. Softbank holds a 90% stake in Arm, and such a move would pit the company against Nvidia, which holds a commanding share of the GPU data center market. This would also mark a "dramatic departure" from the company's historical business model of developing and licensing its intellectual property. It's important to take a step back and put both these news items in context. The economy is on the long road to recovery, which will no doubt result in fits and starts, so it really doesn't matter if the Fed cuts interest rates next week -- it merely impacts investor sentiment. Additionally, Nvidia's technology is deeply entrenched in the fabric of AI, and that's not likely to change anytime soon. Furthermore, Arm makes the vast majority of its income from a few of the world's largest chipmakers -- including Nvidia -- so it's highly unlikely the company is planning to bite the hand that feeds it. And at roughly 33 times next year's expected earnings, Nvidia is still attractively priced, particularly when viewed in the opportunity represented by AI.