Nvidia's AI Dominance: Unprecedented Growth Amidst Market Skepticism

Is Nvidia Going to Plunge 50% (or More)? History Offers a Very Clear Answer. | The Motley Fool

Businesses responsible for leading next-big-thing innovations have a checkered past. Since the advent of the internet roughly three decades ago, there has been no shortage of next-big-thing trends and innovations generating buzz on Wall Street. Some examples include genome decoding, 3D printing, and the metaverse. However, no leap forward in innovation has come close to rivaling the addressable potential for artificial intelligence (AI). In Sizing the Prize, the analysts at PwC forecast that AI would add $15.7 trillion to global gross domestic product by 2030. A $15.7 trillion market is large enough to accommodate a long list of direct and indirect winners in this space. But over the last two years, there's no question that semiconductor colossus Nvidia (NVDA -1.41%) has the prime beneficiary of the rise of AI. The million-dollar question is, "Will the company's share price continue to reflect it?" If history gets its say, don't count on it. Since the start of 2023, Nvidia has gained close to $3 trillion in market value. While other businesses have crossed the $3 trillion plateau before, including Apple and Microsoft, none have come close to gaining $3 trillion in market value in less than two years. The clear catalyst behind Nvidia's stunning rally is its hardware, which has become the "brains" of high-compute data centers. Nvidia's H100 graphics processing unit (GPU), which is commonly referred to as the "Hopper," has earned a near-monopoly share of the GPUs deployed by businesses in AI-accelerated data centers. Nvidia continues to win with its innovation, as well. The successor Blackwell GPU is designed to increase computing speed in six areas, including quantum computing and generative AI solutions, and is going to be more energy-efficient than its predecessor chip. No other GPU developers are particularly close to dethroning Nvidia from the standpoint of computing speed. The company is using overwhelming demand for AI chips and their ongoing scarcity to its advantage, too. Nvidia's Hopper chip has been commanding a price of $30,000 to $40,000, which is anywhere from double to quadruple the price Advanced Micro Devices has been netting for its Insight MI300X AI-GPUs. Nvidia's ability to ask for and receive a premium price for its hardware has helped to pump up its gross margin. To wrap things up in a nice bow, Nvidia's CUDA software platform has served as the lure that keeps customers coming back for more. CUDA is the toolkit used by developers to build large language models and maximize the computing potential of their Nvidia GPUs. It ensures that enterprise clients stay within its ecosystem of products and services. But while things have been close to perfect for Nvidia, history suggests they're about to get incredibly challenging. The long-term outlook for artificial intelligence appears bright. The ability for AI-driven software and systems to become more proficient at their assigned tasks, as well as evolve to learn new skills, gives this technology utility in most industries around the globe. However, the near-term outlook for AI and Nvidia isn't as rosy. As noted, the internet began changing the corporate growth trajectory for the better roughly three decades ago. It allowed businesses to move beyond their storefronts, leading to the business-to-businesses e-commerce revolution. But the long-term success spurred by the internet didn't come without an early stage bubble-bursting event. The dot-com bubble wiped out a number of early stage businesses and slashed nearly 78% off of the Nasdaq Composite on a peak-to-trough basis. While this might sound like an exaggerated example of irrational exuberance on Wall Street for a next-big-thing innovation, history shows us that every game-changing technology and trend for the last 30 years has, eventually (key word!), worked its way through an early stage bubble. Other examples of buzzy trends that, regardless of whether they succeeded or fizzled out over the long run, resulted in bubble-bursting events include: Again, this isn't passing judgment on the long-term potential of any of the above innovations, technologies, or trends, nor does it in any way portend success or failure for artificial intelligence over the long run. What it does show is that all next-big-thing innovations and trends need time to mature -- without exception. At the moment, a majority of the businesses investing aggressively in their AI data centers are doing so to gain first-mover advantages. The issue is that most of these businesses have no concrete idea how they're going to utilize AI to generate a positive return on their AI investments. This all but confirms the notion that investors have, once again, overestimated how quickly a new innovation will be adopted by consumers and/or businesses. The historic peak-to-trough decline for market leaders of a potentially game-changing innovation or trend during a bubble-bursting event isn't pretty. Former leaders in 3D printing and cannabis shed anywhere from 95% to 99% of their value from their respective all-time highs. Companies with established operations fared a bit better, but were still hit hard. For instance, Meta Platforms generates close to 98% of its revenue from advertising on its market-leading social media sites, including Facebook, Instagram, and WhatsApp. When investors came to the realization that monetizing the metaverse would take years and cost quite a bit upfront, shares of Meta lost close to 80% of their value on a peak-to-trough basis before rebounding to fresh record highs. Similar to Meta, Nvidia has a number of established operating segments, including selling GPUs for PC gaming and cryptocurrency mining, as well as providing virtualization software. These segments provide a floor that should keep Nvidia from getting clobbered like 3D printing and cannabis stocks. But at the same time, history tells us that market leaders have lost in the neighborhood of 80% of its value, if not more, when the early stage bubble bursts. At the very least, history foreshadows a halving, if not more, in Nvidia's share price in the years to come.

157 Reasons for Investors to Be Skeptical of Nvidia's Near-Parabolic Gains | The Motley Fool

Optimism surrounding Wall Street's hottest artificial intelligence (AI) stock doesn't match the actions of its board of directors or executives. Roughly 30 years ago, the internet began going mainstream and completely changed the growth trajectory for corporate America. Since the proliferation of the internet in the mid-1990s, Wall Street has been waiting for the next game-changing innovation to provide a leap forward for American businesses. While numerous buzzy trends have come and gone, including 3D printing and the metaverse, artificial intelligence (AI) appears to have answered this long-awaited call. While estimates are, understandably, fluid, the analysts at PwC are looking for the AI revolution to increase global gross domestic product (GDP) by 26% in 2030. This estimated $15.7 trillion GDP boost comes courtesy of increased productivity and various consumption-side effects. A $15.7 trillion addressable market by the turn of the decade suggests plenty of businesses are going to benefit. However, no company has been a more direct beneficiary of the rise of AI than semiconductor titan Nvidia (NVDA 3.14%). Since the start of 2023, Nvidia's market cap has skyrocketed from $360 billion to $3.4 trillion. While a couple of market leaders have reached the $3 trillion valuation plateau before, no one has ever witnessed a $3 trillion increase in market cap in less than two years. Nvidia's success can be explained by its graphics processing units (GPUs) being the undisputed top choice in enterprise data centers. A study from TechInsights found that Nvidia shipped 2.64 million GPUs to data centers in 2022 and 3.76 million in 2023, which represents a 98% share of GPUs shipped to high-compute data centers over these two years. Nvidia's H100 ("Hopper") chip and successor Blackwell GPU architecture are serving as the brains of AI-accelerated data centers. With orders for these chips backlogged, the company has had little trouble commanding a premium price for its products. Earlier this year, the Hopper chip was briefly fetching north of $40,000, which is roughly quadruple what Advanced Micro Devices is netting for its Insight MI300X GPUs. A substantially higher price point fueled by AI-GPU scarcity has lifted Nvidia's gross margin to the mid-70% range. Additionally, Nvidia's CUDA software platform has been masterful in keeping customers loyal to its ecosystem of products and services. CUDA is the platform used by developers to build large language models and maximize the computing potential of their AI-GPUs. On paper, seemingly everything has gone perfectly for Nvidia. But when things seem too good to be true on Wall Street, they usually are. One of the many tools investors can use to gauge both sentiment and value toward a stock is insider activity. Company insiders, which includes board directors and high-ranking members of the executive team, are required to file Form 4 with the Securities and Exchange Commission shortly after they purchase or sell shares of their own company's stock. On Dec. 3, 2020, Nvidia's Chief Financial Officer Colette Kress purchased 200 shares of her company's stock on the open market for approximately $107,400. This marks the last time an Nvidia board member or executive has purchased shares. Comparatively, Nvidia insiders have filed 157 separate Form 4s since Dec. 3, 2020, selling shares of their company's stock. Understandably, not all insider selling is necessarily bad news or portends trouble. Some insiders sell to cover their tax bill -- executives may generate the lion's share of their pay from stock-based compensation, including stock options -- while others are simply diversifying their portfolios or locking in some gains. These are generally benign reasons to sell. But when it's been over four years since the last insider purchase, it raises questions. Whereas there are multiple reasons to sell stock, there's only one reason for insiders to buy: the expectation of shares increasing in value. With sells outnumbering buys 157 to zero over the last four years, it paints a pretty clear picture that insiders don't believe Nvidia stock is a good value. In addition to a steady dose of insider selling by Nvidia's board and executives over the last four years, history is another potential sore spot for current and prospective shareholders to monitor. While there's no denying the long-term potential AI brings to the table for most sectors and industries, history is crystal clear that next-big-thing technologies need time to mature. For three decades, which includes the advent of the internet, every hot trend or innovation has navigated its way through an early stage bubble -- and there's nothing that suggests artificial intelligence will avoid this fate. To add fuel to the fire, most businesses have yet to provide clear plans as to how they'll use AI to generate a positive return on their artificial intelligence hardware and software investments. This serves as further evidence that investors have, once again, overestimated the early stage utility and adoption rate of a new technology. If history rhymes and the artificial intelligence bubble does burst, I can't imagine a stock being hit harder than Nvidia, which has relied almost exclusively on an influx of GPU demand to deliver otherworldly sales growth. For investors with a five-plus-year timeline, these concerns are unlikely to ruffle too many feathers. As noted, AI has a promising outlook and a tantalizing addressable market. But in the quarters and few years that lie ahead, it wouldn't be a surprise if Nvidia's near-parabolic climb came to an abrupt halt.

Could Buying Nvidia Stock Today Set You Up For Life? | The Motley Fool

Nvidia (NVDA -0.05%) is an example of the life-changing potential of stock market investing. If you'd bought $10,000 worth of the stock 10 years ago, you would have an eyewatering $2,947,300 today -- a return of over 29,000%. The company created so much wealth that many of its employees (often compensated with stock options) are multi-millionaires. But new investors looking at these tremendous returns will understandably be a little nervous about arriving at the party too late. After all, no one wants to be left holding the bag. Let's explore the pros and cons of Nvidia's stock to decide whether this legendary chipmaker can still set you up for life. Nvidia's third-quarter earnings were another slam-dunk. Revenue jumped 94% year over year to $35.1 billion, driven by strength in its data center segment, where it sells advanced graphics processing units (GPUs) for running and training artificial intelligence (AI) algorithms. The company commands an incredible gross margin of almost 75% (which suggests its economic moat is strong). That being said, there are signs that growth is beginning to decelerate. Last year (fiscal 2024), Nvidia's third-quarter revenue grew by 206% over the prior year. Investors should expect the slowdown to continue as the company faces increasingly challenging year-over-year comparisons. While there are no cracks yet, it's also unclear how much longer Nvidia will be able to sustain its sky-high margins. The company maintains a strong economic moat through software solutions like CUDA, which makes it easier (and possibly cheaper) to develop programs on Nvidia chips compared to alternatives. However, as the market becomes increasingly flooded with AI-capable hardware, customers may stick with their existing GPUs, instead of spending huge sums to upgrade to the latest models every year. Wall Street remains wildly optimistic about the generative AI industry, with analysts at Bloomberg expecting it to expand at a compound annual growth rate (CAGR) of 42% to $1.3 trillion by 2032. Against this backdrop, Nvidia's chip business would have a lot more room to run. However, this projection makes some big assumptions that aren't guaranteed. The analysts believe that the AI industry will evolve from its current orientation toward training and inference hardware, instead moving toward consumer-software applications. But this transition isn't happening very smoothly. Currently, most of Nvidia's major customers are so-called "hyperscalers" that essentially rent out its GPUs' computing power to start-ups and other AI clients. While this middleman role can be quite profitable, the consumer-facing software often isn't. ChatGPT maker OpenAI is expected to lose $5 billion this year, compared to having just $5 billion in revenue. Competition from a slew of open-source alternatives like Elon Musk's Grok could also make sustainable monetization an uphill battle. For Nvidia, this problem remains abstract. Major customers like Meta Platforms remain committed to buying GPUs. The social media giant spent $38 billion on capital expenditures in 2024 and expects this to grow "significantly" in 2025. However, it's unclear how much longer shareholders will tolerate speculative data center buildouts before pushing back. While Nvidia's situation is complicated, the good news is that its valuation seems to fully price in the concerns about growth and the AI industry's sustainability. With a forward price-to-earnings (P/E) multiple of 34, shares are cheap compared to the company's huge growth rate.

Think Nvidia Is Expensive? This Chart Might Change Your Mind. | The Motley Fool

Recent advances in artificial intelligence (AI) could have a profound impact on our lives. The ability to automate and streamline tasks and create original content has the potential to increase productivity and save time and money. One company that's been on the bleeding edge of that trend is Nvidia (NVDA -2.69%). The company's graphics processing units (GPUs) are the gold standard used to underpin this revolutionary technology, which has fueled a stratospheric increase in its sales and profits -- and, ultimately, its stock price. Nvidia is up 850% since early last year, as of this writing, but it has also seen a commensurate increase in its valuation. The company currently has a price-to-earnings (P/E) ratio of 55, well above the 31 multiple for the S&P 500. While that might seem expensive at first glance, appearances can be deceiving, and the stock isn't as expensive as you might think. While valuation metrics can be helpful tools to assess whether a stock is fairly valued, they should never be considered in a vacuum. For example, a stock can trade at a premium if it has a strong potential for future growth, market dominance, or a strong history of innovation. Nvidia meets all of these criteria, which helps explain why investors are willing to pay up for the stock. For example, for its fiscal fourth quarter, which ends Jan. 28, Nvidia is guiding for revenue of $37.5 billion, which would represent year-over-year growth of 70%, with a commensurate increase in its profitability. It's estimated that Nvidia controls between 70% and 95% of the advanced AI chip market, leaving crumbs for rivals. And its Blackwell AI processor is the most powerful AI-centric processor ever built, as Nvidia's history of innovation continues. However, one chart shows Nvidia isn't as expensive as you might think. You might think Nvidia is expensive at 55 times earnings, but that's a bargain compared with its five-year average multiple of 81. Furthermore, at 32 times next year's expected earnings, Nvidia is attractively priced, especially when considering its growth prospects.

Here's Why Nvidia Remains a Top Artificial Intelligence Stock to Buy Hand Over Fist | The Motley Fool

The artificial intelligence (AI) industry offers a compelling investment opportunity. Forecasts estimate phenomenal growth for the nascent market, going from $184 billion in global sales in 2024 to nearly $827 billion by 2030. Nvidia (NVDA -2.55%) has been a big beneficiary of the AI boom. Amazing sales growth propelled it to the world's leading semiconductor company by market cap, and the company's success makes it among the top AI stocks to buy. Through the week ending Dec. 6, Nvidia shares are trading up almost 190% in 2024. With such an incredible increase, it may seem like the opportunity to buy shares has passed -- but that's not the case. Here's why Nvidia remains a great stock to invest in for exposure to the AI market. One factor making Nvidia an attractive investment is its leadership in advanced semiconductor chips for AI. Some estimates place its market share in the space at 80%. The company initiated this by pioneering accelerated computing back in 1999 with the introduction of its graphics processing unit (GPU). Accelerated computing uses GPUs to perform data-intensive tasks, such as those required by AI systems, leaving other computer processes to be handled by the CPU. Accelerated computing took off with the rise of artificial intelligence, especially in the cloud computing sector, since AI systems commonly reside in the cloud's data centers. Demand for Nvidia's GPUs exploded with it. As a result, in its fiscal third quarter ended Oct. 27, the company's data center sales reached a record $30.8 billion, a staggering 112% year-over-year increase. This drove overall Q3 revenue to hit a record $35.1 billion, up 94% over the previous year. Nvidia's massive revenue growth leads into the other factor making it a top AI stock -- the company's financial performance. Record Q3 sales propelled net income to $19.3 billion, which represented 109% year-over-year growth. Consequently, its Q3 diluted earnings per share (EPS) reached $0.78, up 111% from the prior year. In fact, Nvidia's EPS has been on a rocket ship since AI demand erupted in 2023. In addition, the company exited Q3 with a spectacular balance sheet. Total assets were $96 billion. This included cash, cash equivalents, and marketable securities of $38.5 billion, while total liabilities were just $30 billion. Can Nvidia's incredible success last? Several factors are in its favor. The company is the market leader in GPUs, and its products are being adopted by businesses and governments around the world to build up their AI capabilities. For example, the company's GPUs are used in AI supercomputers for Denmark, Taiwan, and Japan. Nvidia also offers a slew of AI solutions. Its new computing architecture called Blackwell is specifically designed for AI. Each Blackwell GPU contains over 200 billion transistors, making it the world's most powerful chip, according to Nvidia. The company's Chief Financial Officer Colette Kress noted customer demand for Blackwell is so strong, "we are on track to exceed our previous Blackwell revenue estimate of several billion dollars." Adding to its GPU strength, the company also provides software for AI, such as its Nvidia NIM, a set of tools to simplify the creation of generative AI products. Many companies have adopted NIM, including ServiceNow and Broadcom. This integration of hardware and software tie customers more deeply into Nvidia's AI ecosystem and is another of the company's key strengths. Finally, CEO Jensen Huang said he believes the AI era is ushering in a new Industrial Revolution, one where data centers transform into AI factories as technology steadily becomes dependent on AI. This means the cloud computing market, forecast to reach $2.3 trillion by 2032, would increasingly transition to an accelerated computing architecture and, hence, require GPUs. If he's right, as he was about accelerated computing, then tapping into this massive market provides Nvidia with a prosperous future as the leader in AI chips. But what about Nvidia stock's incredible gains this year? Does this mean it's overvalued? Comparing the company's price-to-earnings ratio (P/E), a widely used metric to assess stock valuation, against other semiconductor businesses helps to answer that question. The P/E ratio tells you how much investors are willing to pay for a dollar's worth of earnings. As the chart shows, Nvidia's P/E multiple is the lowest by a substantial margin against other big names in the semiconductor industry, indicating its stock is still a good value. The company's current outstanding financial performance, coupled with the success of products such as Blackwell and the long-term growth of the AI market, means Nvidia is well-positioned for years of prosperity ahead. Despite the stock price gains this year, Nvidia remains reasonably valued, making it a great investment to capitalize on the secular trend of artificial intelligence.

Should You Buy Nvidia Before 2025? The Evidence Is Piling Up, and It Says This. | The Motley Fool

Nvidia (NVDA -2.55%) has roared to the top of the charts when it comes to stock performance this year. The shares are heading for an increase of nearly 190% for the top performance in the Dow Jones Industrial Average, the second-best performance in the Nasdaq 100, and the third-best performance in the S&P 500. And the reason for such gains is clear: Nvidia has built an empire in one of today's hottest industries. I'm talking about artificial intelligence (AI), a market forecast to climb from $200 billion today to $1 trillion by the end of the decade. The tech giant makes the powerful chips key to the development of AI projects along with a whole portfolio of related products and services. And this has helped revenue climb to record levels. It reached $35 billion in the recent quarter, a higher level than a full year of revenue just two years ago. Considering the company's momentum, should you buy Nvidia before 2025? Evidence is piling up, and it's favoring one particular answer. But before we get to that, let's look at Nvidia's story so far. This company wasn't always an AI giant. In their earlier days, Nvidia's graphics processing units (GPUs) powered video games -- then, as it became clear their ability to handle many tasks at once would be useful in other areas, Nvidia made this possible. The company launched the parallel computing platform CUDA, and the GPU expanded its reach, soon becoming the star of the AI revolution. In most of Nvidia's recent quarters, the company's earnings have climbed in the triple digits. In the latest quarter, that growth slowed to the double digits -- but that's not surprising considering comparison quarters have become quite difficult. For example, in the third quarter of last year, revenue already soared to $18 billion. In the recent third quarter, it advanced 94% from that level. Importantly, this story isn't only about revenue, but it's also about profitability. Nvidia has shown its ability to generate high profit on sales, with a gross margin of more than 70%. And the company even predicts these wide margins will continue through the launch of its new Blackwell architecture in the coming weeks and months. This is impressive since product releases come with extra expenses and companies generally aren't at their most cost-efficient levels during the initial stages. Now let's consider whether you should buy this high-flying stock before the new year. One reason you may hesitate is the fact that, during the launch period, Nvidia's margins may remain strong, but the company still will go through a time of transition. Nvidia said getting the launch just right will weigh somewhat on gross margin, bringing it down to the low-70% range from the mid-70s. This, along with the fact that Nvidia surged in 2024, may prompt investors to turn to other stocks with more potential for explosive growth right away. That said, even after Nvidia's impressive earnings and share price performance in recent quarters, the company may be in the early days of its growth story. As I mentioned earlier, the entire AI market is set to take off over the coming years. And Nvidia chief Jensen Huang has emphasized many times that over the coming four or five years, about $1 trillion must be spent to upgrade data centers as part of this shift to accelerated computing. Meanwhile, Nvidia's upcoming Blackwell launch along with future chips -- that it's pledged to update annually -- should help fuel these developments. And that means a whole new era of growth might be just ahead. Considering this, the evidence that's piling up shows us it's a great idea to get in on Nvidia as soon as possible -- to benefit from this new wave of growth that's starting as early as this current quarter. Nvidia predicts it will beat its forecast of several billion dollars of Blackwell revenue in the period. Of course, even a purchase of Nvidia after the new year clearly could deliver rewards down the road. Stock performance over the short term generally won't have much of an impact if you hold on for the long term -- and that's the best way to invest. So, you don't absolutely have to rush out and buy Nvidia stock right now to avoid missing out. But, if you happen to be shopping for stocks before the end of 2025, evidence suggests Nvidia is a fantastic one to add to your list.

Nvidia Stock: Buy, Sell, or Hold? | The Motley Fool

Over the past few years, perhaps no other stock has captured the attention of investors as much as Nvidia (NVDA -0.05%). Once viewed primarily as a designer of chips used to help video game graphics, the company's graphic processing units (GPUs) have become the backbone of artificial intelligence (AI) infrastructure, given their superior processing speed and energy efficiency compared to the central processing units (CPUs) found in computers and smartphones. Meanwhile, the company was able to create a large moat long ago by developing a software platform called CUDA that allows developers to program its chips directly. CUDA became the standard on which developers learned to program GPUs, and that, in turn, has helped make Nvidia GPUs the most desirable today. While the market for GPUs has become extraordinarily large with the advent of AI with plenty of developers, Nvidia nonetheless has been able to capture an approximately 90% market share. Despite this market dominance and its huge stock price gains in recent years, Nvidia's stock remains attractively priced, trading at a forward price-to-earnings (P/E) ratio of about 31 based on 2025 analyst estimates and a price/earnings-to-growth (PEG) ratio of approximately 1. A PEG ratio less than 1 is typically viewed as undervalued, while growth stocks will often carry PEG ratios well above 1. While Nvidia's past success has been well documented, the question today for many investors is whether the stock is a buy, sell, or hold going forward. Let's take a look at why I think the stock is still a potential buy. With an attractive valuation and a wide moat, I think the most important issue that will ultimately help determine whether Nvidia's stock is a buy or sell is how future GPU demand shapes up. The parallel that bearish investors tend to draw on is how demand for Cisco Systems' routers, which were the backbone of the internet infrastructure boom, dried up after the initial huge surge. One big difference, however, is the issue of obsolescence. Part of the reason Cisco began seeing a slowdown was that router technology during that time was evolving quickly, and older routers were becoming obsolete pretty quickly despite their high costs. The networking company also did not have the wide software moat that Nvidia currently enjoys. Nvidia's GPUs, on the other hand, have been designed to be backward-compatible. So, while its technology is continuing to advance and its GPUs become more powerful, its older GPUs remain useful and don't become obsolete. The most important thing with GPU demand, though, is that as tech giants and AI start-ups train their large language models (LLMs), they not only need more computing power, but also exponentially more computing power when they advance. For example, xAI's Grok3 model was using 10 times as many GPUs to train on as Grok2 (it was originally 5x, but it was recently upgraded to 10x), while Alphabet has said its Llama 4 LLMs would need as much as 10 times the computing power as its earlier predecessor. Currently, some of the world's largest technology companies have been racing to create better AI models, including Amazon, Alphabet, Meta Platforms, and Microsoft. All are investing heavily in AI infrastructure, and most have already indicated that their capital expenditure budgets related to AI will increase in 2025. Amazon CEO Andy Jassy has called AI a "maybe once-in-a-lifetime type of opportunity," while Meta CEO Mark Zuckerberg and Alphabet's CEO Sundar Pichai have both indicated that the bigger risk with AI is underinvesting. Oracle Chairman Larry Ellison, meanwhile, has said he sees no let-up in sight for AI training over the next five to 10 years. If I believed that the CEOs of the world's largest tech companies would suddenly become satisfied that their AI models are good enough and that they don't need the best one in the next few years, I'd be a seller of Nvidia's stock. However, given the competitive nature of this buildout, I just don't see that happening. That means that Nvidia will continue to be a big AI winner and that its stock is still a buy.

Is Nvidia Stock a Buy Before Jan. 7? Here Is What History Suggests. | The Motley Fool

It's hard to believe, but 2024 is almost over. Similar to the last two years, perhaps no other company gained as much attention this year as Nvidia (NVDA -2.55%). This year represented the year Nvidia evolved from a mere chapter in the artificial intelligence (AI) storyline to being the outright author of the narrative. Nvidia's influence in AI is so large that just about any announcement from the company has the power to move the entire capital markets. While the end of the year is just a few weeks away, I wouldn't tune out just yet. Right at the turn of the New Year (on Jan. 7, to be precise), Nvidia is almost assuredly going to find itself dominating headlines once again. Let's explore what is happening in early January and assess why this is an important time for Nvidia investors. Between Jan. 7 and 10, technology enthusiasts, media journalists, and corporate executives will descend on Las Vegas for one of the biggest conferences of the year -- the Consumer Electronics Show (CES). CES is similar to Comic-Con but for techies. The tradeshow is an opportunity for business leaders to reveal and discuss new product launches they have in the works and how these services are set to disrupt the next megatrend. Naturally, AI is the hottest topic in the tech realm right now by a mile. And while I suspect just about every company at CES will be touting its AI roadmap, investors will be honed in on the biggest player in the space -- Nvidia. Below, I've annotated the dates of CES over the last several years and detailed what announcements Nvidia made during these events. Furthermore, I've included some analysis of how Nvidia's stock price moved following prior CES shows. As you can see, from 2020 to 2022, Nvidia was still primarily focused on enhancing graphics for higher-end PCs -- namely, those made for gaming and esports. It wasn't until 2023 that Nvidia really started making some progress on the AI frenzy. Make no mistake, this timing is not coincidental. OpenAI released ChatGPT on Nov. 30, 2022. I personally see the release of ChatGPT as the impetus that sparked the AI fire. Naturally, Nvidia used CES 2023 as a time to show off its plans to get involved in the AI revolution, which was essentially unfolding in real time. While Nvidia's share price declined following CES 2022, I have my doubts over whether the drop was related to anything specific to the company. Rather, the sell-off was predicated on broader weakness in the market on the backdrop of a challenged macroeconomic environment. Taking this idea a step further, Nvidia's share price gains of nearly 50% just one month following CES 2023 likely had a couple of catalysts. In addition to AI emerging as the next big megatrend, 2023 was a bounce-back year in the market -- particularly for technology stocks. Following a precipitous decline of 33% for the Nasdaq in 2022, the index rebounded spectacularly and returned 43% in 2023. The Nasdaq's momentum from 2023 has carried into this year, with the index gaining 32% so far in 2024 as of this writing. While Nvidia's announcements at CES in 2023 and 2024 likely inspired some increased buying, the stock price movement is actually largely disconnected from the event itself. Sure, there are hype-driven narratives in the days leading up to and following high-profile events, such as CES. But Nvidia's stock price continued gaining mostly thanks to broader positive sentiment around the potential of AI. Nvidia has proven that it is one of the biggest engines fueling the AI movement, and I suspect that whatever the company has in store at CES 2025 will further demonstrate that. But to me, the upcoming CES event is similar to an earnings report. What I mean by that is even though investors will get some exciting updates, choosing whether or not to buy a stock before a singular event doesn't make a ton of sense. Instead, I'd encourage investors to watch how Nvidia is continuing to invest in research and development (R&D) and understand how these new products and services will further separate Nvidia from competition in the long run. That's a much better way to consider if you should be buying or holding Nvidia stock.