Nvidia's Stock Fluctuates Amid AI Advancements and Market Challenges

Nvidia Stock Climbs As AI, Tariff News Spark Buying Interest - NVIDIA (NASDAQ:NVDA)

Feel unsure about the market's next move? Copy trade alerts from Matt Maley -- a Wall Street veteran who consistently finds profits in volatile markets. Claim your 7-Day free trial now. NVIDIA Corp NVDA is bouncing back, rising 3.7% by late Monday morning, as investors react to reports of a more measured U.S. tariff approach and fresh AI developments out of China. Despite recently triggering a Death Cross -- a traditionally bearish technical signal -- Nvidia stock is seeing renewed buying pressure, signaling a potential turnaround. Read Also: Nvidia Could Be The First $4 Trillion Stock; Here's Why... Tariff Tensions Ease, AI Race Heats Up Tech stocks led the market rally Monday after reports suggested former President Donald Trump may scale back broad tariffs on key trading partners. Among the sectors benefiting? Chips. Tariffs on semiconductors could be delayed or limited, providing a tailwind for Nvidia and other tech giants. Meanwhile, news from China's Ant Group -- co-founded by Jack Ma -- added another boost to semiconductor stocks in general. Ant reportedly trained advanced artificial intelligence models using domestically produced chips alongside processors from Advanced Micro Devices Inc AMD. The development underscores China's AI ambitions and the ongoing demand for high-powered chips, even as U.S. export restrictions limit Nvidia's reach in the region. Technical Signals: Mixed, But Improving? Chart created using Benzinga Pro Despite Monday's gains, Nvidia stock remains down 11.77% year to date, with technical indicators still flashing caution: The recent surge pumped Nvidia stock above its eight-day ($118.49) and 20-day ($117.65) simple moving averages (SMAs) -- suggesting renewed buying interest in the stock amongst traders. Despite the short-term leverage, Nvidia stock continues to trade below its 50-day ($126.57) and 200-day ($127.79) SMAs -- historically bearish signs. The Moving Average Convergence Divergence (MACD) indicator at a negative 2.54 -- also leaning bearish. The Relative Strength Index (RSI) sits at 51, suggesting Nvidia stock is neither oversold nor overbought. However, with renewed buying pressure and easing trade war concerns, Nvidia bulls are watching for a potential reversal. What's Next For Nvidia Stock? CEO Jensen Huang recently highlighted growing AI demand at the company's GTC Conference, emphasizing that even lower-cost models require more computing power than previously expected. With tariff relief on the table and AI innovation accelerating, Nvidia's next move could hinge on whether these tailwinds can overcome lingering technical weakness. For now, Nvidia investors are enjoying some relief -- just how long it lasts remains to be seen. Read Next: Nvidia Chip Flows Under Scrutiny As Malaysia Moves To Tighten Regulations Amid US Export Controls On China Photo: Shutterstock NVDANVIDIA Corp$122.003.65%Stock Score Locked: Want to See it? Benzinga Rankings give you vital metrics on any stock - anytime. Reveal Full ScoreEdge RankingsMomentum82.75Growth95.09Quality97.24Value7.15Price TrendShortMediumLongOverviewAMDAdvanced Micro Devices Inc$113.907.01%Market News and Data brought to you by Benzinga APIs

Nvidia Stock Looks Cheap Right Now, but Here's 1 Reason It Could Actually Be Expensive | The Motley Fool

The artificial intelligence (AI) behemoth Nvidia (NVDA 3.16%) has gotten off to a rocky start this year, with shares down about 9% (as of March 24) so far in 2025. The emergence of the Chinese AI chatbot DeepSeek, concerns about economic growth, and President Donald Trump's proposed tariffs have led investors to reconsider the popular AI trade. But as most long-term investors know, sell-offs are often opportunities to buy shares of great companies at more attractive valuations, especially if the company's fundamentals are still intact. Many would argue that this is the case for Nvidia, with Wall Street near a consensus buy on the stock. However, while Nvidia stock may in fact be cheaper right now, there's one reason it actually could be expensive. A big part of the Nvidia story over the years and in the present is the company's incredible margins. Gross margin is calculated by taking revenue, subtracting the cost to make the goods sold, and then dividing this number by revenue. While gross margin doesn't account for all expenses at a company, it looks at the money retained after the costs to make a product. A high gross margin also indicates efficiency and pricing power because it suggests a company has the power to set a high cost relative to the cost of the good. That implies there is an inelastic demand. As you can see, Nvidia's gross margin has contracted in recent quarters. In the company's fiscal 2025 fourth quarter (ended Jan. 26, 2025), the gross margin fell to just over 73%. That's still an incredible gross margin and earnings still increased from the third quarter. But it also means that the increase in the cost to make Nvidia's chips and other AI infrastructure didn't translate into as much revenue growth. For instance, in the company's third quarter, the cost of revenue grew 20% from the prior quarter and revenue grew 17%. But in the fourth quarter, the cost of revenue rose 19%, while revenue only grew 12% quarter over quarter. This might lead investors to believe that pricing power is eroding and there is more competition than initially believed, especially considering that Nvidia's margin is so high. On Nvidia's fourth-quarter earnings call, CFO Colette Kress said that its gross margin should remain in the low 70s as the company's next-generation Blackwell chips ramp up, but there will be an opportunity to see gross margin rebound back into the mid-70s later in fiscal year 2026 (now underway). Wall Street analysts seem to be giving the company the benefit of the doubt. Analysts on average expect the gross margin to bottom in the current quarter at 71.1%, according to data provided by Visible Alpha. They then expect the gross margin to rebound to nearly 74.5% by the end of fiscal year 2026. Diluted earnings per share are also expected to grow by nearly 48% in fiscal 2026 on a year-over-year basis. Nvidia currently trades slightly under 26 times forward earnings, which is much more appealing than when the stock traded at about 50 times forward earnings or more not too long ago. However, if management turns out to be incorrect and Nvidia's margin continues to contract, then Nvidia could actually be over-earning right now and its price-to-earnings (P/E) ratio would significantly increase if its market capitalization holds. As already mentioned, analysts currently project the gross margin will rebound this year and this very well could happen. It's something investors should consider not just with Nvidia, but with any stock they are covering. The forward P/E ratio (which relies on estimates) is a great indicator of where a stock is situated but it doesn't always tell the full story. The actual earnings of a company are critically important and can significantly impact the P/E ratio. It's certainly going to be a big driver for Nvidia's stock price this year.

Nvidia Stock Just Did This for the First Time in 3 Years. Here's What History Says Will Happen Next | The Motley Fool

Nvidia (NVDA 3.16%) amazed investors over the past few years, climbing with what seemed like nonstop momentum to reach record levels. The stock even soared beyond $1,000 last year before the company launched its stock split, a move to lower the per-share price. All of this is thanks to Nvidia's position in one of today's most-watched markets: artificial intelligence (AI). Analysts expect this market to explode higher throughout the decade, and developments we've seen so far support this idea. Tech giants are investing billions of dollars in their AI programs -- and many already are starting to see the efforts bear fruit. For example, Amazon's cloud computing arm last year posted a $115 billion revenue run rate as customers opted for its AI products and services. All of this has helped Nvidia's earnings to climb. The share price followed until recently, as concerns about the general economy outweighed optimism about Nvidia's financial results and future prospects. In fact, just last week, Nvidia stock did something it hasn't done for nearly three years. Let's take a look at this move, and consider what history says will happen next. Whether you're new to investing or have been buying stocks for years, you may have heard of technical analysis. It involves looking at historical market data to predict what a stock may do next. It's often associated with shorter-term investing as it could guide you to buy or sell at a specific moment to potentially benefit. Well, in the world of technical analysis, Nvidia stock just made a big move. Its 50-day moving average (an average price trend over a given period of time) last week passed below its 200-day moving average, forming what's known as a "death cross." And a death cross suggests negative momentum is picking up and that it could become a lasting trend. Now let's consider how Nvidia stock performed following its last death cross -- back in April of 2022. The measure was an accurate predictor of what was to come, as Nvidia stock sank about 45% from that point through the rest of the year. Another such move happened in November 2018, and Nvidia stock went on to drop more than 40% in the following nine months. So, does this mean Nvidia absolutely is heading for a sustained period of losses and that you should stay away from the stock? Not necessarily. It's important to remember that though technical analysis may on many occasions successfully detect short-term trends, it doesn't take into account fundamentals -- such as a great earnings track record -- or positive news that the company may report at any moment. Day traders find these patterns useful as they buy and sell in a matter of hours or days, but long-term investors shouldn't let a technical trend affect their investing decisions -- for two key reasons. First, as mentioned, technical analysis doesn't consider the true value of a company as measured by its fundamentals. It basically indicates when you might buy or sell in the near term to post a gain. But, to potentially score an even bigger win, you're better off betting on a quality stock for a number of years so that you can benefit as the company grows and develops in its market. Second, sentiment about a given stock -- in this case, Nvidia -- may shift overnight. At any point, if a key external element that's weighing on Nvidia changes, the stock could take off. For example, if the Trump administration loosens up the latest tariffs on imports or reaches an agreement with trade partners, that news may lift Nvidia shares. So, for the long-term investor, it's best to buy a stock when the valuation looks reasonable rather than attempting to wait for the very lowest level. It's very difficult to time the market, and if you try, you may miss out on opportunities (and spend way too much time starting at your computer screen). It's important to note that Nvidia went on to roar higher after past death cross periods -- more than 85% in the 18 months following the 2022 death cross and about 140% in the two years following the 2018 event. All of this means it's best to set aside concerns about potential short-term patterns and focus on a company's prospects over the coming years. In this case, Nvidia offers us plenty of reasons to be enthusiastic about what's to come. The company is the AI chip leader, and its focus on innovation should keep this going. And Nvidia's not only generating standout revenue, but it's also doing this at a high level of profitability -- with gross margin of more than 70% each quarter. Considering these points, trading for 25 times forward earnings estimates down from 50 earlier this year, Nvidia stock looks very reasonably priced today. So, even if history suggests Nvidia's negative momentum could continue, savvy investors may use this as an opportunity to get in on the stock for a good price -- then hold on and potentially win over the long term.

1 Trillion Reasons Why Nvidia Stock Is a Screaming Buy Now | The Motley Fool

Nvidia (NVDA 3.16%) has been one of the most dominant stocks in the market in 2023 and 2024. However, 2025 hasn't been so kind to the computing giant, as its stock is down over 18% from its January highs. There are fears that the massive AI spending wave could be affected by an uncertain economic outlook or that Nvidia's largest clients may look elsewhere to fulfill their computing power demands. Yet none of those fears have surfaced yet, and Nvidia's CEO and founder Jensen Huang just gave an astonishing outlook into how he projects spending on AI computing. During Nvidia's GTC conference (its annual conference about its products), Huang stated that Nvidia's data center infrastructure revenue will hit $1 trillion by 2028. No company on earth has revenue that large, with Walmart currently holding the top spot at $673.8 billion in annual revenue. Furthermore, that's only data center revenue; it doesn't include any of Nvidia's other segments. However, if Nvidia's data center revenue reaches $1 trillion by 2028, that will dwarf any other segment's revenue total. That's a huge number, but it realistic? Over the past four quarters, Nvidia generated data center revenue of $115.3 billion. However, this segment is seeing remarkable growth, as Q4 data center revenue was up 93% from a year ago. So, if Nvidia continues at this 93% pace and keeps it up over the next four years (through 2028), will that be enough to hit $1 trillion? The answer? Yes. Should Nvidia continue at its 93% growth rate, it would actually produce $1.6 trillion in data center revenue by 2028. That's a complete overshoot of Huang's projections. Nvidia would only need to grow its revenue at a compound annual growth rate (CAGR) of 72% through 2028 to make the $1 trillion projection happen. So, to see how realistic this guidance is, investors need to monitor Nvidia's data center revenue growth during each quarterly earnings report. It needs to stay elevated above that threshold during the first few years for Nvidia to stay on target. If it doesn't, then it won't be surprising if Nvidia misses its $1 trillion goal. While a 72% CAGR seems incredibly optimistic, what can investors expect if Huang is right? If Nvidia were to reach $1 trillion in revenue and maintain its 56% profit margin, it would produce $560 billion in profits. That's a mind-boggling figure that no company is even close to right now, and it would provide jaw-dropping returns. Even if Nvidia traded at the market average price-to-earnings (P/E) ratio of 22.3 (that's what the S&P 500 trades at right now), that would give Nvidia a market cap of $12.5 trillion. Considering that Nvidia's market cap is currently at $2.9 trillion, that would indicate Nvidia's stock would rise roughly 330% over the next four years. Any investor would be happy with returns like that over a four-year period, which makes Nvidia an intriguing stock to buy now. But what if he's wrong and Nvidia falls short of expectations? Nvidia still looks like a good buy now. Nvidia's stock no longer trades at a huge premium. It's now priced at 26 times forward earnings, which is cheaper than many of its big tech peers. So, even if Nvidia still grows but falls short of its $1 trillion in revenue goal, then it should still be a successful investment, as it's not starting off with an unrealistic valuation.

Nvidia Thinks It Just Unleashed a Robot Revolution. Is It Time to Buy the Stock Hand Over Fist? | The Motley Fool

It's no secret that Nvidia (NVDA -0.66%) currently stands at the center of the artificial intelligence (AI) boom. The company's GPUs are the gold standard for powering AI models. It's also no secret that AI is critical to developing the next generation of robots. Unsurprisingly, therefore, Nvidia is an important player in robotics technology. And the company thinks it just unleashed a robot revolution. Is it time to buy Nvidia stock hand over fist? Last week, Nvidia announced several new technologies that it claimed would "supercharge humanoid robot development." Nvidia Isaac GR00T N1 was the centerpiece of the company's new offerings. The company introduced GR00T N1 as "the world's first open, fully customizable foundation model for generalized humanoid reasoning and skills." Nvidia revealed that this new foundation model uses an architecture inspired by how humans think. The System 1 version mirrors human reflexes, while the System 2 version makes deliberate and methodical decisions. The company also introduced simulation frameworks and blueprints for robotic development. The Nvidia Isaac GR00T Blueprint supports generating synthetic data. Newton is an open-source physics engine Nvidia is developing with Alphabet's Google DeepMind and Disney Research. Nvidia said that Newton "lets robots learn how to handle complex tasks with greater precision." "The age of generalist robotics is here," according to Nvidia CEO Jensen Huang. He stated, "With Nvidia Isaac GR00T N1 and new data-generation and robot-learning frameworks, robotics developers everywhere will open the next frontier in the age of AI." These new robotic development offerings are just the beginning. Nvidia said that GR00T N1, which is already available, is the first of multiple models the company will launch for robotics developers. Disney Research is among the first organizations deploying Newton. The unit is using Nvidia's engine to develop next-generation entertainment robots including the BDX droids inspired by Disney's Star Wars franchise. Kyle Laughlin, senior vice president of Walt Disney Imagineering research and development, said, "The BDX droids are just the beginning. We're committed to bringing more characters to life in ways the world hasn't seen before, and this collaboration with Disney Research, Nvidia, and Google DeepMind is a key part of that vision." Laughlin added, "This collaboration will allow us to create a new generation of robotic characters that are more expressive and engaging than ever before -- and connect with our guests in ways that only Disney can." Entertainment isn't the only goal for the next generation of robots powered by Nvidia's technology, though. The company said that its models will accelerate the development of robots to help industries that face significant labor shortages. Are Nvidia's new robotics products a good reason to buy the stock hand over fist right now? Not on their own. For one thing, new products don't always live up to the hype. Also, it remains to be seen how much Nvidia GR00T N1 and the simulation frameworks and blueprints will move the needle for a company that generated $130.5 billion last year. However, the potential to pave the way for a new age of robots could be one of several reasons to buy Nvidia stock. The market opportunity is huge, with global labor shortages estimated at more than 50 million people. Another more compelling near-term reason to consider investing in Nvidia is the likely growth of its new Blackwell GPU architecture. Huang said in the company's fourth-quarter earnings call, "The demand for Blackwell is extraordinary." Despite the beginning of a rebound, Nvidia's share price remains nearly 20% below its peak set earlier this year. Buying Nvidia on such pullbacks has always paid off handsomely in the past. History just might repeat itself.

Stock Market Uncertainty Has Rattled Investors. Is Artificial Intelligence (AI) Darling Nvidia Still a Buy? | The Motley Fool

The Nasdaq has dropped markedly as investors sour on technology stocks. If there is one thing that investors really don't like, it's uncertainty. Right now, a host of factors ranging from new tariffs, geopolitical unrest in the Middle East and Europe, economic indicators such as jobless claims -- and even some murmurings of stagflation -- have made investors uneasy. After soaring to record highs over the last two years, the Nasdaq Composite has turned southward -- and mega-cap tech stocks have sold off in epic fashion. In just the last month, artificial intelligence (AI) darling Nvidia (NVDA -0.66%) has lost roughly $600 billion in market value following a 16% drop in its share price. Could more drops be in store for Nvidia, or is now a lucrative opportunity to take advantage of the market slump and buy the dip? The direction in which a share price moves and the underlying business fundamentals for a specific business are not always correlated. Although shares of Nvidia have been sliding for several weeks now, the financial profile below shows a pretty compelling picture -- one that underscores the demand for Nvidia's products and services are in demand, and the company is able to fulfill this demand at a highly profitable rate. One good way to assess what Nvidia's future could look like is to pay attention to the moves of its customers. Some of Nvidia's largest clients include cloud hyperscalers Microsoft, Alphabet, and Amazon, as well as another "Magnificent Seven" member, Meta Platforms. Each of these companies recently reported earnings for the full calendar year 2024. During their respective earnings calls, investors learned that these AI behemoths are gearing up to spend north of $320 billion on AI infrastructure at the high end of their guidance this year. Considering that competition in the data center GPU market is still limited, I think it's highly likely that Nvidia will benefit greatly from rising capital expenditures (capex) among its largest existing customers. Over the past year, investors have been peppered with talking points about Nvidia's next-generation GPU architecture, Blackwell. Well, Blackwell is finally here, and its initial results did not disappoint. During the fourth quarter, revenue from Blackwell came in at $11 billion -- which was above management's internal estimates, according to Nvidia CFO Colette Kress. While Blackwell is expected to be Nvidia's latest growth engine in the near term, the company is already working on a line of new products that should not be overlooked. Just a few days ago, Nvidia CEO Jensen Huang took the stage at the company's high-profile GTC conference. In addition to Blackwell, Huang showcased a lineup of successor architectures dubbed Blackwell Ultra, Rubin, and Rubin Ultra. Over the next couple of years, Nvidia is expected to continue releasing refined versions of its already market-leading GPUs. In my eyes, the spending forecasts from big tech that I referenced above indicate that AI remains a top priority, and I think that supports Nvidia's efforts to double down on research and development (R&D) and continue innovating at light speed. The chart below illustrates Nvidia's price-to-earnings (P/E) multiple over the last several years. At a P/E of roughly 40, Nvidia stock is actually trading close to its cheapest valuation on a P/E basis in five years. The AI revolution has not just served as a bellwether for Nvidia -- it represented a transformative shift in the company's operation from primarily a business focused on gaming to one that is now fueling myriad applications across the AI realm for the world's largest companies. While a cratering stock price may give the appearance of a bearish narrative, the trends analyzed in this piece suggest that Nvidia's future prospects look incredibly bright. Shares appear to be trading for a bargain compared to historical valuation levels, making the ongoing sell-off stock a terrific opportunity to double down and buy the dip in Nvidia stock.

Hold Nvidia? Here Are 2 Unstoppable AI Stocks You Can Also Buy. | The Motley Fool

Many artificial intelligence (AI) stocks have sold off recently, presenting compelling buying opportunities for patient investors. But folks with a sizable amount of their portfolio in names like Nvidia (NVDA -0.66%) may be looking for other ideas. Here's why Vertiv Holdings (VRT -2.37%) and Nebius Group (NBIS -7.04%) stand out as two exciting AI stocks -- and why Nvidia is also an incredible buying opportunity hiding in plain sight. Daniel Foelber (Nvidia): Despite blowout earnings and impressive new product innovations, Nvidia stock is down over 12% year to date at the time of this writing. The sell-off has pushed Nvidia's forward price-to-earnings (P/E) ratio down to just 26. Nvidia is now less expensive than many of its big tech peers, like Apple and Microsoft, which both fetch forward P/Es over 29. Even Walmart has a forward P/E of 32.5. Investors may be wondering why a company at the cutting edge of AI is such a bargain. The answer comes down to expectations. When investors are optimistic about a company's near-term growth prospects, they may be willing to pay a premium price for the stock. But when investors are pessimistic, they may prefer to value companies on where they are today, rather than where they are going. Over the last year, Nvidia's diluted earnings per share (EPS) is up 72%. Over the last three years, revenue is up over 340%, and earnings are up over 680%. Growth at that level won't continue, since Nvidia is now a much larger business. But this change is already reflected in analyst estimates. Fiscal 2027 EPS estimates are $5.76, which would be just 27.2% higher than the fiscal 2026 forecast. If Nvidia even comes close to those targets, we'll look back at today's stock price as dirt cheap in hindsight. But what if there's a global economic slowdown, Nvidia's customers slash their spending, and Nvidia's growth stalls or even turns negative? In that scenario, Nvidia will likely fall short of analyst estimates. Nvidia's low valuation prices in some of these risks, making the stock a better balance of risk and potential reward. And even if the stock pulls back during an industry slowdown, Nvidia the company should have no issues investing in its long-term growth plans. Nvidia has done a masterful job sustaining high margins and brushing off competition. It has an impeccable balance sheet, with more cash, cash equivalents, and marketable securities than long-term debt. The company can easily afford to pour money into research and development and continue innovating even during a downturn. That way, it can take even more market share when the cycle reverses. Add it all up, and Nvidia remains a foundational AI stock that investors can build a portfolio around. Lee Samaha (Vertiv): Shares in Nvidia partner Vertiv are down 22% year to date at the time of this writing due to a combination of a market sell-off in AI-related stocks and some disappointing near-term news from the company on orders from Europe. The company's connection to AI comes from its critical digital infrastructure technologies used in data centers. As demand for data-intensive AI applications rises, so will demand for AI-capable data centers. This is where Vertiv comes in. As noted, Vertiv did see some orders pushed out in Europe in the fourth quarter, but according to management, this is due to regulatory decisions related to new energy-efficiency regulations in effect in 2025 in Europe. However, it's likely to prove temporary, as end demand remains robust. While orders were flat year over year in the fourth quarter, they still rose 30% on a full-year basis. Management's guidance for 2025 reflects underlying growth: Revenue is forecast to grow 16% organically, and adjusted operating profit to increase by a colossal 25%. The market has sold off the sector on valuation concerns, but Vertiv now looks like a commendable value. It trades at 17.7 times Wall Street estimates for free cash flow (FCF) in 2026 -- that looks cheap for a stock with double-digit revenue growth prospects -- and definitely cheap for an AI-related stock. Scott Levine (Nebius Group): It's certainly not a name as easily recognizable as Nvidia, but Nebius is an AI business that can grow in popularity as the industry continues to flourish. Developing the infrastructure to support AI usage, Nebius provides investors with an indirect way to gain Nvidia exposure. It may be flying under the radar right now, but opportunities like these are where investors can benefit considerably if they have the resolve to stick with a high-risk, high-reward stock like Nebius. While Nebius has businesses developing autonomous driving and providing training data for generative AI, the company's AI infrastructure business represents the lion's share of the company's revenue -- more than 50% in fourth quarter 2024. The company is working to expand its AI infrastructure presence considerably. In the coming weeks, Nebius plans to launch its first Nvidia GPU cluster (using Hopper GPUs) in the United States; moreover, the company announced a goal to deploy more than 22,000 of Nvidia's Blackwell GPUs in data centers located in the U.S. and Finland in 2025. With demand for AI infrastructure growing in 2024, Nebius benefited from strong revenue growth last year. The company logged sales of $117.5 million. And while the company came up short of guidance, reporting an annualized run rate (ARR) of $90 million in December 2024, management seemed optimistic about growth in 2025. In the Q4 2024 earnings announcement, Arkady Volozh, founder and CEO of Nebius, stated that with "the anticipated impact of additional data center capacity and Blackwell GPUs coming on-stream later this year, I am pleased to confirm that our projected December 2025 ARR of $750 million to $1 billion is well within reach." Although the future seems bright, the company is still incurring losses, so there's a fair degree of risk here. For those willing to make a speculative investment, Nebius stock could be a long-term winning pick.

My Top 3 Bargain AI Stocks to Buy after the Stock Market Drop | The Motley Fool

The stock market downturn has created a rare opportunity to purchase several high-quality stocks at discounted valuation levels. The U.S. equity market began 2025 on a positive note, with the S&P 500 index increasing nearly 2.8% in January 2025. Market sentiment was largely optimistic, fueled by strong earnings from artificial intelligence (AI)-powered companies and optimism about a resilient economy. However, things have worsened, as growing geopolitical tensions, rising economic uncertainty, and the increasing probability of trade wars are affecting investor confidence. The Nasdaq Composite spent much of March in correction territory, 10% off its highs. But this challenging period of market sell-offs also offers some of the best long-term buying opportunities, particularly for stocks of high-quality companies with sustainable competitive advantages and strong financials, as they trade at discounted prices. Here's my list of three top-notch AI-powered stocks that have become bargain buys. Shares of Nvidia (NVDA -4.83%) have plummeted more than 20% from their recent high of $153 on Jan. 7, triggered mainly by worries about AI overspending and trade wars. Despite this slump, the rapid pace of AI infrastructure buildout is the primary growth catalyst for Nvidia, a semiconductor giant accounting for almost 90% of the AI GPU market. With major technology companies gearing up to spend over $300 billion on AI technologies and data center buildouts in 2025, Nvidia's AI GPUs and AI-optimized software solutions continue to be in high demand. Demand for the recently launched Blackwell architecture systems is already surpassing supply. Designed mainly for inference workloads (deploying and running pre-trained large language models), including reasoning (a special inference use case), Blackwell is well-suited for advanced models that utilize large amounts of computing power and perform complicated and multistep tasks. By focusing on the recurring inference workloads (compared to training workloads), Nvidia is now targeting a much larger addressable market. Furthermore, Nvidia's tightly integrated software ecosystem has a significant competitive advantage since it has helped create a sticky customer base by dramatically increasing clients' switching costs. Nvidia CEO Jensen Huang also announced plans to launch Rubin GPU, the successor to Blackwell GPUs, in the second half of 2027 in a speech at the recent GTC conference focused on AI development. Despite the many pros, Nvidia is trading at a forward price-to-earnings ratio of 27.1, far lower than its five-year average of 72. Considering Nvidia's enviable position in the rapidly expanding AI market and valuation correction, it seems an unmissable buying opportunity. Shares of Meta Platforms (META -2.37%) have also fallen significantly, around 19% from its 52-week high of $740.91 on Feb. 14. Yet, the unparalleled strength of its core family of apps (including Facebook, Instagram, Messenger, Threads, and WhatsApp) and robust AI initiatives position it for a solid recovery in the coming months. With over 3.3 billion daily active users using at least one of its social media applications in December 2024, Meta enjoys access to vast amounts of real-time data about customer interests, preferences, behavior, and spending patterns. This data is then analyzed using advanced AI technologies to optimize content recommendation algorithms, which helps boost user engagement further. This has translated into robust growth for Meta's advertising business, which raked in revenue of $46.8 billion in the fourth quarter of 2024, up 21% year over year. The company benefits from increased advertiser demand and ad pricing on its platforms -- mainly due to its robust ad targeting capabilities. Meta is also investing heavily in AI initiatives. In fiscal 2025, the company plans to spend around $60 billion to $65 billion on AI-related data center buildouts and other initiatives. The company is a frontrunner in the agentic AI space with its widely used Meta AI assistant. The company is also making strides in the open-source large language model development space. Meta also boasts a strong balance sheet, with $77.8 billion in cash and $49.8 billion in debt. Yet, its valuation seems quite reasonable, with a forward P/E ratio of 23.9 -- lower than those of technology giants Nvidia, Microsoft, and Amazon, which enjoy similar competitive advantages in their respective industries. Hence, Meta seems a compelling buy for astute investors in 2025. Finally, Oracle (ORCL -1.85%) stock has also seen a lot of volatility, with shares trading 23% lower from their 52-week high of $198 this past Dec. 9. The sharp drop has provided an attractive entry point for investors, considering Oracle's remarkable growth trajectory in the cloud infrastructure business and rapid progress in AI initiatives. Oracle's remaining performance obligations (RPO, a measure of future revenue from existing contracts) totaled $130 billion at the end of the third quarter of fiscal 2025 (ended Dec. 31, 2024), a 63% increase year over year. Since cloud RPO grew 90% year over year and accounted for nearly 80% of the overall RPO, this metric strongly indicates demand for the company's cloud services. Furthermore, with 31% of the RPO expected to be recognized in the next 12 months, Oracle benefits from significant revenue visibility. Oracle's cloud infrastructure (OCI) business clocked an annualized revenue of $10.6 billion. Oracle also focuses on expanding its live data center count and power capacity to convert RPO into actual revenue. With the current demand for cloud services outstripping supply, OCI's revenue growth pace can further accelerate with increased data center capacity. The company is also making rapid progress in AI training and inferencing. Oracle's AI-related GPU consumption revenue was almost 3.5 times higher at the end of the third quarter than those earned in the prior year. Furthermore, Oracle invests heavily in building AI GPU clusters alone or in partnership with other companies. Oracle has also developed an AI Data Platform, to enable clients to use leading large language models from different sources to analyze their data stored in Oracle databases. Oracle is also a part of Project Stargate, an AI infrastructure investment initiative worth $500 billion, backed by the U.S. government. While Stargate has not yet contributed to Oracle's RPO growth, it can be a significant growth catalyst in the coming months. Yet, the stock trades at a forward P/E of 21.5, lower than its historical five-year average multiple of 32.8. Against this backdrop, any major positive news could push up the company's share prices in 2025.

3 Must-See Updates From Nvidia's AI Event | The Motley Fool

The Nvidia (NVDA -3.99%) GPU Technology Conference (GTC) has become a big event for the artificial intelligence developer community in recent years, and when CEO Jensen Huang gave his keynote speech at this year's event last week, he had some noteworthy thoughts to share about where AI is going and news about Nvidia's place in its future. If you're a Nvidia shareholder or are considering becoming one, here are three important updates you need to know about. Nvidia only recently rolled out its newest and most powerful graphics processing units (GPU), built on its latest Blackwell architecture, and demand has been intense. Nearly every developer and platform is looking for ways to leverage AI, and Nvidia has the most effective products to support those efforts. In its fiscal 2025's fourth quarter, which ended Jan. 26, revenue swelled by 78% year over year. Huang noted that Nvidia already had already booked billions of dollars in sales of Blackwell in its first quarter on the market. Tech giants with the budgets to build massive AI data centers want the best, and none of them wants to fall behind their peers. But Nvidia is already developing its next iteration of powerful chips: the Rubin architecture. These will be 14 times more powerful than Blackwell, and as AI's needs evolve and expand, it's a no-brainer bet that the companies developing and supporting the software will want the most powerful chips they can buy. Rubin is expected to launch late next year. Agentic AI is one of the next waves in the artificial intelligence space. These specialized tools will be able to act as "agents" on a user's behalf, autonomously taking care of such tasks as booking flights or writing emails after being prompted with simple requests. Because that will mean that such systems will need to manage far more steps, Huang said he thinks that agentic AI is going to need 100 times more power than current AI tools need. He thinks that those who believe that the advent of tools like DeepSeek -- which was apparently much cheaper to develop than previous large language models -- are going to undermine Nvidia's sales are getting it wrong, because the sheer power requirements of agentic AI will mean a greater need for chips like Nvidia's. While some peers have similar offerings on the market, Nvidia dominates in terms of production and sales in cutting-edge GPUs and AI accelerators, and it's constantly improving its chips to retain that dominance. Before Nvidia became a household name, it was a successful company and top stock in large part because of its strength in the video game segment. It has vast experience in creating worlds for its gaming products, and it can synthesize this with its reasoning capabilities to act in what's called "physical AI," or robots that can "think" and take action. Huang said "Everyone, pay attention. This could very well be the largest industry of all." It announced two new partnerships that will focus on this -- one with General Motors for its electric vehicles, and another with Walt Disney and Alphabet for robotics development. Nvidia stock is down 12% this year and is 21% off of its high. Despite the company's incredible financial performance last year and the tech sector's insatiable demand for its products, the stock market was spooked by the DeepSeek launch, and it remains wary about what's in store for Nvidia. Right now, Nvidia looks untouchable, but it wouldn't be the first time in history that an industry giant was caught by surprise by a smaller, more agile competitor with better technology. Huang is clearly not concerned that this could happen. He sees the DeepSeek model as a win for the AI industry overall and envisions cheaper AI models further fueling demand for Nvidia's products. If you already own Nvidia stock, I wouldn't worry too much, but I would suggest not letting that position become too large a piece of your portfolio. If you've benefited from Nvidia's meteoric rise over the past few years, you might want to consider selling some shares to rebalance your portfolio, remain well-diversified, and minimize your risk. However, if you don't own Nvidia stock yet, it's looking attractive right now, trading at only 21 times forward 1-year earnings. At this valuation, you might want to open a position.

Why Nvidia Stock Is Tumbling Today | The Motley Fool

Nvidia (NVDA -5.95%) shares are plunging today as investors worry that a major market for the artificial intelligence (AI) leader may be getting choked off. Nvidia has been caught in the trade battle between the U.S. and China before. But a move by the Chinese government today more directly targets Nvidia's AI chips than it had in the past. That news drove Nvidia shares more than 5% lower this morning. As of 11:37 a.m. ET, Nvidia stock was still down by 4.7%. Global trade pressure is part of the reason shares have dropped about 8% year to date. Concerns about Nvidia's business came from both sides today. The U.S. has announced a new trade blacklist of Chinese companies citing national security concerns. The list of more than a dozen Chinese tech companies includes major Nvidia customers. The U.S. government will now need to approve sales to companies on the list. At the same time, Chinese regulators have reportedly been pressuring its largest technology companies from purchasing Nvidia's H20 semiconductor chips citing the need for energy efficiency improvements. The H20 was specifically designed to qualify for sale in China after the U.S. imposed sanctions that disqualified its most powerful chips. The situation adds uncertainty for investors in a meaningful market. China was Nvidia's fourth-largest market, contributing $17.1 billion in revenue in fiscal 2025. That was 13% of its total sales. Nvidia CEO Jensen Huang has proven his leadership abilities in navigating trade issues before. As far back as 2022, Nvidia transitioned some operations out of China due to export controls. While data center revenue in China grew last year, the company says as a percentage of its total, it remains well below levels achieved prior to the onset of export controls in late 2023. Yet the company has thrived. Investors should feel confident it can navigate the current environment as well. Today's drop looks to be another opportunity to buy shares of the AI leader.

Why Nvidia Stock Is Sinking Today | The Motley Fool

Shares of Nvidia (NVDA -5.77%) are sliding on Wednesday. The AI chip leader's stock lost 4.3% as of 11:20 a.m. ET and was down as much as 5.2% earlier in the day. The drop comes as the S&P 500 and Nasdaq Composite indexes have lost 0.3% and 1.1%, respectively. The AI chip giant is facing fresh challenges in China -- an important market -- as regulatory pressures mount. Chinese regulators are reportedly discouraging the country's tech companies from purchasing Nvidia's H20 chip, claiming the processors breach energy efficiency regulations. The H20 is designed specifically for the Chinese market. Nvidia may prepare modifications to meet the new standards, but any alterations could affect performance, making them less competitive. The U.S. is reportedly adding dozens of Chinese companies to a trade blacklist over national security concerns. The expansion of export controls is an escalation of ongoing trade tensions and is likely to be met with a Chinese response in kind. These dual pressures from both Chinese and American regulators create a difficult operating environment for Nvidia in what has historically been a significant market for the company. The developing situation highlights Nvidia's vulnerability to geopolitical tensions, which have intensified under the current administration. Nvidia also faces mounting competition from rival chipmakers. But Nvidia remains the undisputed leader in the space, and with the ongoing blockbuster launch of its Blackwell chips, its new networking hardware, and more than $300 billion in AI-centered capex planned from its core customer base, Nvidia is in a good position to maintain its dominance. With a forward price-to-earnings ratio (P/E) of just under 27, it is competitively priced.

Stock Market Sell-Off: 2 AI Stocks to Buy Now and Hold for 20 Years | The Motley Fool

The recent dip in the major market indices has included some significant declines in the shares of leading artificial intelligence (AI) companies. Some of these tech stocks had monster runs over the last few years and might have been due for a pullback. Broader market fluctuations have a way of affecting individual stocks (for good and for bad) even if they represent great companies. While pullbacks are never fun for current shareholders, investors who are looking to buy now to fund retirements that are well in the future were just given a great opportunity to put some money to work. There are several elite AI stocks out there now trading lower valuations. Here are two AI stocks caught up in the broader market volatility worth buying today because they could be rewarding over the long term. Nvidia (NVDA -5.59%) is a no-brainer investment. It has been on the cutting edge of graphics processing unit (GPU) technology for a long time, and today, it controls a high percentage of the GPU market for data centers, where those chips provide the parallel processing muscle needed to train and power AI. With demand for its AI accelerators looking likely to remain strong for years, Nvidia should continue to grow and deliver great returns for investors. Because of AI, spending on data centers is accelerating for the first time in many years. Historically, about $250 billion has been spent annually on data center infrastructure. That could increase to $1 trillion annually by 2029, according to a forecast by Dell'Oro Group. But Nvidia CEO Jensen Huang believes these estimates underestimate the long-term opportunity, given the emergence of a new type of single-purpose data center built to support AI -- what Nvidia calls "AI factories." Every company that has a factory will also have an AI factory, according to Huang, and that assertion makes sense when you think about it. Companies across retail, transportation, and energy are using AI, and the technology will become more deeply rooted in how companies operate. "There's no question in my mind that out of $120 trillion global industries that a very large part of that [...] will be AI factories," Huang said during a recent conference call with analysts. Competition may heat up at some point from Advanced Micro Devices or other chip companies that want a piece of Nvidia's AI action -- which has propelled its profit margin to a remarkable 56%. But Nvidia's strengths in innovation and the large base of 5.9 million developers who use its CUDA software tools to get the most out of its GPUs should protect its lead. With the stock trading at 27 times this year's earnings estimate, Nvidia's long-term growth potential seems underestimated. It doubled its revenue last year, and analysts currently forecast that it will grow its earnings at an average annualized rate of 33% in the coming years. Buying shares of Broadcom (AVGO -4.64%) would complement an investment in Nvidia. Broadcom designs custom AI accelerators for its clients, and it's seeing robust demand for them. These specialized chips serve specific needs in data centers, such as moving data faster in GPU-powered servers. Revenue from Broadcom's AI solutions grew 77% year over year in its fiscal 2025 first quarter, which ended Feb. 2. With data center operators (hyperscalers) continuing to invest heavily in infrastructure, Broadcom should continue to see strong growth. It estimates the serviceable addressable market from three prominent hyperscalers alone will be between $60 billion to $90 billion in fiscal 2027, which is significant compared to its trailing-12-month revenue of $54 billion. Importantly, Broadcom has a long history of investing in opportunities that lead to great returns for shareholders. The stock has returned 1,300% over the last 10 years, so it's encouraging to see management announce plans to increase spending on research and development to keep its AI accelerators at the leading edge. The negative for Broadcom right now is its diversification across markets. It also provides chips for mobile devices, networking, and industrial markets, and this exposure across the semiconductor landscape means the company's revenue can be cyclical. Its non-AI semiconductor sales were down 9% sequentially last quarter due to seasonal weakness in the wireless market. Despite these near-term risks, the stock should continue to trade at a premium valuation based on Broadcom's history of excellent returns and opportunities in the data center space. Analysts expect its earnings to grow at an annualized rate of 22% in the coming years. The increasing computerization of the economy will benefit Broadcom investors over the next 20 years.

Nasdaq Post-Correction: My Top 3 AI Stocks to Buy Before They Soar | The Motley Fool

The Nasdaq, an index that roared higher over the past two years, spent most of March doing just the opposite. The benchmark slid into correction territory earlier in the month, meaning it fell more than 10% since its most recent high back in December. The reason for this shift? Investors worried that President Donald Trump's plan to impose a series of tariffs on imports could hurt growth at home. Growth-oriented stocks are particularly sensitive to the economic backdrop, so when uncertainty arises, they're often the first to decline. But, in recent days, the picture has brightened. Trump's latest comments suggest a certain flexibility regarding the implementation of tariffs, so investors have grown hopeful that impact on companies and the economy may be limited. This optimism spurred gains in the Nasdaq, lifting it out of the correction zone earlier this week, though the index has shifted back periodically. The Nasdaq has recovered some recent losses, but many of its stocks still are trading at bargain -- or at least reasonable -- prices. And this includes players in the promising and high-growth area of artificial intelligence (AI). Let's check out three of my favorite AI stocks to buy before they soar. Palantir Technologies (PLTR -4.33%) momentum seemed unstoppable until recent times. The AI software company posted the biggest gain in the S&P 500 last year, advancing 340%, and climbed to a record high in February. Investors have been excited about the company's double-digit revenue growth in its two businesses: government and commercial. Palantir sells these customers AI-driven platforms that help them aggregate and make better use of their data. The results often can be extremely impressive, with improvements in efficiency, cost control, and more. I particularly like how Palantir has been able to consistently balance growth with profitability, and proof of this is the steady growth in its Rule of 40 score. A result of 40% or higher shows a company is doing a good job on the growth/profit balance. Palantir, with a recent score of 81%, clearly is hitting it out of the park. Today, Palantir's forward price/earnings-to-growth (PEG) ratio, a valuation metric that considers growth, is 0.8. A reading under 1 suggests a stock may be undervalued. After the stock's 24% drop from its peak, now is a great time to hop on board. What I love about Amazon (AMZN -2.19%) is the fact that the company is using AI to improve its own business and selling AI products and services through its cloud-computing unit to generate revenue growth. So this e-commerce and cloud powerhouse is benefiting from AI across its operations. All of this has been bearing fruit, helping to lower Amazon's cost to serve in e-commerce and adding billions of dollars in revenue to its cloud earnings. I expect this to continue considering Amazon Web Services' (AWS') dominance in the cloud market -- it's the No. 1 player globally -- and the enormous growth forecasts for the AI market. On top of this, we're in the early stages of the AI story as companies today build out platforms. We haven't yet reached the stage when applying AI to daily life is a regular thing for all companies. All of this means AI should drive AWS growth for years to come, and since AWS is Amazon's main profit driver, this is a big deal. Today, Amazon shares trade for 32 times forward earnings estimates, down from 45 times just a few months ago -- a bargain for this AI stock that is ripe to head higher on any positive AI news. Meta Platforms (META -2.42%) is mainly known for its family of apps that probably populate your phone -- from Facebook and Messenger to WhatsApp and Instagram. More than 3.3 billion people use at least one of these on a daily basis. Today, this social media dominance is helping Meta show its strengths in AI. The company launched Meta AI in 2023, and it's now the most used AI assistant worldwide. How does Meta aim to win in AI? By introducing it across its platforms and fine-tuning AI assistants, for example, to serve the needs of users. This could prompt folks to spend more time on Meta's apps, thus driving advertisers to spend more and more of their dollars there to reach them. To accomplish this and other AI goals, Meta is investing big -- as much as $65 billion this year alone -- with the goals of constructing a massive data center and increasing its number of AI chips. The company also has designed its own large language model (LLM) and has made it open source -- a move that could position Meta for leadership in the AI industry. Today, Meta stock trades for 24 times forward earnings estimates, down from a peak of 29 times a few weeks ago, a fantastic buying opportunity as this potential AI winner could surge at any moment.

Why Buying Nvidia Stock on the Dip Is Probably Smart -- and Buying Palantir Stock Probably Isn't | The Motley Fool

Coming into 2025, these two artificial intelligence (AI) stocks were on a roll. Nvidia's shares soared 171% last year while Palantir skyrocketed a whopping 340%. The stories are much different now. Both stocks are down more than 20% from their peaks (with Palantir plunging nearly 30% below its previous high). Is buying these two once-hot AI stocks on the dip a smart move? While both Nvidia and Palantir have seen their share prices take a shellacking, their big dips have different dynamics. Let's first look at Nvidia. After starting the year with a nice gain, the overall trajectory for Nvidia stock has been downward ever since (albeit with up-and-down swings along the way). The biggest news for the company came on Feb. 26 with its fourth-quarter update. Nvidia again reported tremendous growth with Q4 revenue soaring 78% year over year and adjusted earnings per share jumping 71%. However, many investors were concerned that the chipmaker's growth continues to slow and its gross margins are sliding. Meanwhile, Palantir's share price began to slump more quickly at the beginning of 2025. The stock soon reversed course, though, and went on a huge run that eventually resulted in a 65% year-to-date gain. But Palantir's momentum hit a brick wall a few weeks into February. The company's Q4 results announced on Feb. 3 weren't the culprit. Instead, investors worried about Palantir CEO Alex Karp's planned sales of $1.2 billion of his shares and a report that steep U.S. defense budget cuts were coming. The U.S. government is Palantir's largest customer. Returning to our original question: Is buying these stocks on the dip a smart move? I think Nvidia probably is a smart pick, but Palantir probably isn't. For one thing, Nvidia's growth is much stronger than Palantir's. Even though Nvidia's revenue growth is slowing somewhat, the company still projects sales will jump 65% year over year in Q1. Palantir expects full-year 2025 revenue growth of 31%, down from 38% growth in 2024. Nvidia's valuation is much more attractive than Palantir's, too. Sure, Nvidia's shares trade at a relatively high 26.2 times forward earnings. However, factoring in growth makes the stock look much less overpriced. Nvidia's price-to-earnings-to-growth (PEG) ratio, which includes five-year growth projections, is 1.13, according to LSEG. By comparison, Palantir's forward earnings multiple is a sky-high 158.7. Its PEG ratio is 3.09. Looking ahead, I'd rather be sitting in Nvidia's position more than I would Palantir's. Nvidia should enjoy booming sales from its new Blackwell GPU chips this year. It has even more powerful chips on the way. Agentic AI, robotics, autonomous vehicles, and possibly artificial general intelligence (AGI) could drive increased demand for its technology. Meanwhile, Palantir's top customer (Uncle Sam) is slashing spending with uncertainty surrounding how much agencies will spend on software going forward. I wouldn't rule out the possibility that Palantir's close association with the U.S. government could negatively impact its ability to win sales outside of the U.S., either. Note that I used the word "probably" in my answer about the wisdom of buying Nvidia stock on the dip but not buying Palantir. Why did I use this wiggle word? I acknowledge that my assumptions could be wrong. Nvidia's growth could slow more than I anticipate if the demand for AI chips tapers off. Palantir could make more headway in landing corporate and foreign government customers than I think it will. While my take could be proven wrong, though, I stand by it. I'm not alone in being much more bullish about Nvidia than Palantir, by the way. Wall Street has much greater expectations for Nvidia, too.

Nvidia Is Down 23% From Its Peak. Here's How the Rest of 2025 Could Play Out for This Artificial Intelligence (AI) Powerhouse. | The Motley Fool

Nvidia (NVDA -0.75%) has been the biggest success story of the artificial intelligence (AI) era thus far with the stock jumping more than tenfold from the start of 2023, shortly after ChatGPT came out, to its recent peak. Nvidia's market capitalization, which now hovers around $3 trillion, topped out at close to $4 trillion a few months ago. No other company in the history of the stock market has created as much wealth as quickly. Not surprisingly, Nvidia is still closely followed by investors, some of whom want to know if the stock can keep climbing, and others who want some assurance that their windfall gains won't suddenly disappear in a stock market slump. Nvidia's shares have already given up some of those gains, sliding 23% (as of March 19) from its peak in January as a combination of weakening consumer and business sentiment, slowing revenue growth, and some doubts about long-term AI demand have weighed on the stock. However, because of that pullback, Nvidia is now the cheapest it's been since 2019, arguably setting up a buying opportunity. Is Nvidia a buy right now? Let's take a look at what the company could have in store for the rest of the year. Nvidia recently hosted its annual GTC conference -- all heavily focused on AI -- and if there was one takeaway from the event, it's that the company has no intention of resting on its laurels. At the conference, CEO Jensen Huang outlined the company's product roadmap including future chip platforms like Rubin and Feynman, and touted AI forecasts, including one that showed data center capital expenditure spending reaching $1 trillion by 2028. The company also announced new partnerships, including one with General Motors to build autonomous vehicles. Among its other announcements, the company said it would build an accelerated quantum computing research center, giving it a stake in an emerging technology that some think could be as influential as AI. Nvidia also unveiled new partnerships with cloud hyperscalers Oracle, Microsoft, and Alphabet, ensuring that it maintains close relationship with its top customers and that its chips and components continue to meet their needs. It also introduced a multi-year plan that showed investors it would continue to push the envelope in AI. For example, Huang told the GTC audience that Rubin, its next GPU generation that is set to be released in late 2026, would power a supercomputer that is 14 times more powerful than the current equivalent, and requires less power. Nvidia faces a number of company- and industry-specific risks, namely that it needs AI spending to continue to increase, but there are also macroeconomic factors that have weighed on the stock and are keeping some investors cautious. The semiconductor industry is cyclical, and Nvidia has gone through several economic cycles before with the stock falling sharply. That doesn't mean the AI boom is about to end, but investors should be mindful of that risk. Tariffs also present a risk to the company, though it has already been forced to adapt to restrictions on exports to China, meaning that the trade war isn't an entirely new challenge. Given the company's 78% revenue growth in the fourth quarter and its strong guidance for the first quarter, the macro uncertainty doesn't appear to be impacting Nvidia's business, though it may be weighing on the stock. A recession or a slowing economy could impact growth of the business. However, the big tech companies that make up its biggest customers are all well-capitalized and therefore have the resources to continue to invest in AI. They also believe that underspending on the new technology is a greater risk than overspending. It's impossible to perfectly predict a stock's performance, but 2025 is shaping up to be another strong year for Nvidia's business even if macro-level concerns are weighing on the broader stock market. The company is continuing to be aggressive with its business expansions, partnerships, and new product launches, and demand for the new Blackwell platform, which is now in full production, is outstripping supply. Expect Nvidia to unveil more partnerships and product advances as the year goes on. While investors may have one eye on potential headwinds facing the company, such as the impact of DeepSeek, the overall outlook for Nvidia still looks strong, and the stock is trading at an attractive valuation following the recent pullback.

Nvidia Stock Is Down Over 20% From Its All-Time High. Here's Why It Could Soar by the End of 2025. | The Motley Fool

Nvidia (NVDA -2.01%) has been one of the companies that have been in the crosshairs of investors dumping stocks amid the market downturn. This shouldn't surprise anyone since Nvidia has been one of the best-performing stocks over the past few years, and many investors have made huge unrealized gains. But there's still plenty of upside for it, and I think right now could be a great buying opportunity. The stock had phenomenal years in 2023 and 2024, and although 2025 is looking a bit shaky, I won't be surprised if it soars by the end of 2025. Nvidia rose to become one of best AI stocks (if not the best) because it sells graphics processing units (GPUs) and the infrastructure to support them. GPUs are one of the more popular hardware options for training AI models because of their excellent computing ability and versatility. GPUs can process multiple calculations in parallel, which makes them incredibly fast at processing complex calculations. While some types of computing equipment can outperform them, this requires the workload to be set up in a specific manner, which may not be possible depending on the situation. As a result, GPUs have become the go-to option for many AI hyperscalers. This has caused Nvidia to deliver unprecedented growth figures for its size. However, it's fairly obvious that its growth looks to be slowing (although 78% revenue growth is nothing to sneeze at). Still, this is the investor's primary concern with the company: When will enough computing power be enough? Recently, CEO Jensen Huang spoke at the company's annual GTC event and boldly predicted that data center revenue will surpass $1 trillion by 2028. Considering that Nvidia's data center revenue totaled $115 billion over the past 12 months, that prediction implies a lot more growth. But is it an unreasonable prediction? I don't think so. In its fiscal 2025's fourth quarter (ended Jan. 26), Nvidia's data center business grew revenue at a 93% pace. For the data center divisions to reach $1 trillion in revenue by 2028, they would need to grow at a compound annual rate of 72%. So, Huang's bold projection shows a moderate slowdown in growth from today's levels but still a ridiculous pace overall. This will be a key figure to watch in the quarters reported throughout 2025. If its data center growth trends lower and approaches that 70% pace, it will be clear that Nvidia likely won't hit its $1 trillion projection. But if it stays elevated in the 80% to 90% range, then it could have a shot at hitting its lofty $1 trillion revenue goal. The $1 trillion goal may be a bit high, but investors should still understand that demand for GPUs isn't going anywhere. With high demand continuing, this should reassure investors. Now, with the stock down around 20% from its all-time high, it's a great time to look at scooping up shares. Following the sell-off, it now trades near the lowest levels it has seen over the past few years. The stock looks like an absolute steal at 26 times forward earnings; many big tech companies still trade for much higher than that despite much worse growth prospects. Considering that the S&P 500 trades for 21 times forward earnings, you don't have to pay much of a premium to own one of the biggest growth stocks of our time. Even if Nvidia falls short of its lofty $1 trillion protection, it will still put up monster growth, thanks to the huge spending from the AI hyperscalers. I think Nvidia's stock is just getting started, and with the shares on sale, now makes for an excellent time to take advantage.

Where Will Nvidia Stock Be in 4 Years? The Answer May Shock You. | The Motley Fool

Nvidia holds a dominant market share in the data center GPU space. Right now, Nvidia (NVDA -2.01%) is one of the most popular artificial intelligence (AI) stocks on the market, although it has taken a bit of a beating during the marketwide sell-off. However, investors don't need to consider where Nvidia is right now. Instead, they should focus on years down the road. The market is a forward-looking entity, so investors should be, too. Nvidia CEO Jensen Huang recently predicted where the company will be in four years. While most predict that Nvidia's business will grow, few realize the potential growth in store. Nvidia makes graphics processing units (GPUs), which are suited for many tasks requiring intense computing power. Originally, they were used for processing gaming graphics, but eventually found use in other industries, like cryptocurrency mining, engineering simulations, and drug discovery. However, their biggest use case to date has been AI model training. GPUs can process multiple calculations in parallel, making them suitable for tasks requiring a lot of computing power. They can also be combined in clusters to further amplify this effect, which is why you'll hear stories of AI hyperscalers building data centers with more than 100,000 GPUs. Nvidia holds a dominant market share in the data center GPU space, so it will receive the lion's share of the revenue from the massive AI computing power buildout. Over the past 12 months, Nvidia's data center revenue totaled $115 billion. That's an incredible amount of revenue, but according to Huang, that's just the beginning. By 2028, he expects data center revenue to eclipse a whopping $1 trillion. For reference, Walmart produces the most revenue of any company in the world, $674 billion over the past 12 months. So, if Nvidia reached this target, it would be the world's largest company by revenue by a long shot. Furthermore, with Nvidia's superior operating profile, it will produce the most profits by far. Apple produces the most profits of any American company, generating $126 billion over the past 12 months. If Nvidia's profit margin stays at its current level (56%) and generates $1 trillion in revenue, it would generate $560 billion in profits. That's an astonishingly larger company than anything we know now, but is it realistic? In fourth-quarter fiscal year 2025 (ending January 26), Nvidia's data center revenue rose 93% year over year. If Nvidia's data center revenue reaches $1 trillion by the end of 2028 (the end of Nvidia's FY 2029), it will need to put up a compound annual growth rate (CAGR) of 72%. While a four-year 72% CAGR for a company of Nvidia's size is unheard of, it does represent a slight slowdown from its current growth rate. I'm not saying this will be easy (or that Nvidia will even achieve it), but Huang has a much better pulse on the AI industry than the rest of us, and when he speaks about monster growth, investors would be wise to listen. If Huang's projection comes true, Nvidia will be a fantastic stock to own moving forward and will deliver market-crushing returns. But even if Nvidia only achieves half of Huang's projection, it will still be an incredibly strong stock and one that investors can't afford not to own. As a result, I think investors should use the sale price on Nvidia's stock to buy into the stock, as these buying opportunities don't come around very often.

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

One of the foundational pieces of the fast-growing artificial intelligence (AI) market has been the advanced semiconductors that make AI tools possible. Nvidia (NVDA -2.01%) has garnered the most attention in this space, as its processors dominate AI data centers. But its smaller rival, Advanced Micro Devices (AMD -3.15%), also designs impressive artificial intelligence chips and has solid financial growth. So, if you're looking for a better AI stock to invest in, which is the right choice? Here's the case for both and why Nvidia is still the best way to go. Nvidia holds an estimated 70% to 95% of the AI accelerator market, and that has led to amazing financial results for the company. Nvidia's sales soared 385% from fiscal 2023 to fiscal 2025, reaching $130.5 billion, as tech companies clamored to put Nvidia's chips in their data centers. That's been the catalyst for Nvidia's share price surging 438% over the past two years, and while it's unrealistic to assume its stock will see similar gains over the next few years, it could still put up impressive returns. To understand why, it's important to point out that AI is still in its early stages. It may seem like it's been around for a while now, but in terms of companies investing in AI infrastructure, we're still in the early innings. Companies have already poured hundreds of billions of dollars into AI data centers, and they're not slowing down. Nvidia CEO Jensen Huang believes that yearly spending could reach $2 trillion by 2030. Nvidia already benefits from this ramp-up in spending, and while tech companies always invest a lot in new technologies, AI spending may be unlike anything else in the past. PwC estimates AI could generate $15.7 trillion in additional GDP just five years from now, and tech companies are terrified to be left behind. Consider that in the most recent earnings calls, some tech companies have talked about economic uncertainty but haven't pulled back on their AI infrastructure spending. They know they can't afford to lose the AI race. With Nvidia's dominant AI processor position, it's hard to imagine the company not benefiting from AI's rise over the coming years. Artificial intelligence is simply too important for tech companies to try to do it on the cheap, so investing in high-end processors -- which Nvidia designs -- is likely their best approach for the next several years. One of the best cases for AMD is that the AI data center market is so large that there's room enough for two semiconductor companies to benefit. Indeed, AMD has already reaped the rewards from its growth. AMD reported record annual revenue in 2024, with sales jumping 14% to $25.8 billion, and diluted earnings per share soared 89% to $1.00. The company's data center segment revenue also doubled from the previous year, proving that tech companies may be interested in diversifying their AI processors' needs. That should help AMD continue its growth streak, with AMD CEO Lisa Su saying on the company's fourth-quarter earnings call that its data center business will grow by "strong double-digit" percentages this year. With so much spending on data center processors, AMD is likely to cash in on at least some of the money being thrown around. Its processors may not keep pace with Nvidia's, but they could be a good alternative if tech companies want more supplier diversification. While AMD is doing its best to keep up, it's very clear that tech companies building AI infrastructure overwhelmingly prefer Nvidia's processors over AMD's. Nvidia has such a massive lead over AMD in this market that it's difficult to imagine AMD gaining much ground against its largest rival. Shockingly, based on the trailing price-to-earnings multiple for both companies, AMD's shares are far more expensive. The stock has a P/E of 106, while Nvidia's is much lower at 40. So not only is Nvidia the dominant AI processor company, but its shares are also relatively cheaper, easily making Nvidia the better AI stock to own in this matchup.

Better Artificial Intelligence (AI) Stock: Nvidia vs. AMD | The Motley Fool

Artificial intelligence (AI) chip stocks are having a torrid time on the market in 2025, and that's not surprising. The sector has been hit hard by multiple headwinds of late, such as the viability of the huge sums being spent by tech giants on beefing up AI hardware and the growing concerns about a possible economic downturn in the U.S. This explains the 10% decline in the PHLX Semiconductor Sector index so far this year. Not surprisingly, two of the sector's key components -- Nvidia (NVDA -2.01%) and Advanced Micro Devices (AMD -3.15%) -- have also witnessed sharp declines in their share prices in 2025. What's worth noting is that both these semiconductor stocks are benefiting from the growing adoption of AI, which is evident from their latest financial results. But if you have to choose one of these two AI stocks for your portfolio right now, which one should it be? Let's find out. Nvidia dominates the market for AI chips and enjoys a huge lead over AMD. Nvidia sold $36 billion worth of data center graphics cards in the previous quarter alone, which was more than seven times the revenue that AMD generated from data center graphics cards in the entirety of 2024. Nvidia is on track to record sequential growth in the data center GPU business once again in the current quarter, as management said on last month's earnings conference call. Its revenue forecast of $43 billion for the current quarter would translate into a year-over-year increase of 65%. That's more than double AMD's estimated growth of 30% for the current quarter to $7.1 billion. Nvidia enjoys such a big lead in the AI chip market that it is growing significantly faster than AMD despite having a much larger revenue base. Looking ahead, there is a solid chance that it will continue to crush AMD in the market for AI data center GPUs, since the former's latest-generation chips are already ramping up at a remarkable pace. The company says that its Blackwell AI GPUs delivered $11 billion in revenue in the fourth quarter of fiscal 2025 (which ended on Jan. 26), making it "the fastest product ramp in our company's history, unprecedented in its speed and scale." It said that production of Blackwell processors is in full swing right now and that it's focused on expanding supply quickly to meet the strong customer demand. AMD, uncharacteristically, didn't give a concrete full-year forecast for its AI GPU sales for this year. That's because the company says it is going through "a little bit of a product transition time frame in the first half of the year." CEO Lisa Su said that this transition could lead to a "flattish" performance in the data center business in the first half of 2025 as compared to the second half of 2024. The company attributes the transition to its decision to speed up the launch of its MI350 series of AI GPUs to mid-2025, after originally aiming for the second half of the year. It looks like AMD has been forced to release its MI350 processors earlier than expected in response to the terrific start that the latest Blackwell processors have achieved. That's not surprising since the company announced the MI350 last year to rival Blackwell. AMD's next-generation processors are better than Nvidia's Blackwell processors on paper. However, better specs won't necessarily translate into better sales for two reasons. First, Nvidia sells entire systems that include software and other parts such as memory and networking components. The company locks customers into its software ecosystem -- called compute unified device architecture (CUDA) -- that a community of developers can use to create programs that eventually allow its customers to cut down on the development time of their generative AI applications. Second, it has a strong grip over the AI chip supply chain. Both Nvidia and AMD are fabless chipmakers, which means that they simply design their chips. The actual fabrication is done by foundry giant Taiwan Semiconductor Manufacturing, popularly known as TSMC. Nvidia has cornered the majority of TSMC's production lines. According to one report, it has secured more than 70% of TSMC's advanced chip-packaging capacity. So, even if AMD brings out a powerful chip, it may be constrained by capacity. That's why Nvidia is likely to remain the dominant player in this lucrative market, which is expected to have a compound annual growth rate of 31% through 2031. It should be clear by now that Nvidia is likely to remain the better AI stock of the two companies discussed in this article. And its valuation gives investors yet another reason to buy it over AMD, as the following chart shows. Nvidia is significantly cheaper than AMD based on trailing earnings multiples. Moreover, their forward earnings multiples are closely matched as well. Considering that Nvidia is growing much faster than AMD and it can sustain its dominance in the AI chip market, it makes sense for investors to consider buying it over AMD right now.

3 AI Giants Well-Positioned to Bounce Back Stronger After The Nasdaq Correction | The Motley Fool

After many artificial intelligence (AI) companies recently led the Nasdaq Composite (^IXIC -2.70%) into correction territory, it's time to start thinking about what will happen next. Many are worried that an economic slowdown triggered by unknowns around tariffs could slow AI investments and hurt many of these companies. However, there haven't been any signs of this occurring yet, and this correction looks like a great time to scoop up some of the best AI stocks out there. I've got three companies that I think can emerge stronger than ever, and investors need to pay attention to them, as they likely won't stay beaten down for long. Although AI hyperscalers have built a ton of computing capacity, they are far from finished. A massive amount of money is being spent on AI infrastructure, and those numbers are expected to reach record levels this year. This clearly benefits the companies that are on the hardware side of AI, meaning companies including Nvidia (NVDA -1.51%), Taiwan Semiconductor (TSM -1.27%), and ASML (ASML -2.24%) are primed to emerge from this correction even stronger. Nvidia has been powering the AI arms race since it kicked off, with its graphics processing units (GPUs) being the computing muscle behind AI models. GPUs can process multiple calculations in parallel, unlike a CPU, which can do one at a time. This effect can be multiplied by connecting thousands of GPUs in clusters. By doing this, AI hyperscalers can quickly train AI models. With each generation of AI modes becoming more complex, this requires more computing capacity, and Nvidia benefits. Nvidia CEO Jensen Huang sees massive growth in data center computing. He has predicted data center buildout of $1 trillion. While that may be a bold projection, with the way AI spending is going, a figure like that wouldn't surprise me. And I think Huang better understands where the industry is heading than most people do, so this prediction could be more accurate than most think. Regardless, Nvidia's business will be just fine over the next few years, and the most recent stock market dip looks like a great reason to scoop up shares, especially because they're trading for 26 times forward earnings. Considering Nvidia's potential growth, this seems like a no-brainer price to pay for the stock, and I wouldn't be surprised to see it soar throughout the rest of 2025. More GPUs mean more chips, and with Nvidia not having the manufacturing capabilities to produce chips itself, it farms out that work to Taiwan Semiconductor. With President Donald Trump ramping up tariffs on goods imported to the U.S., TSMC in early March announced an additional $100 billion investment in U.S. production capabilities. While critics say that Trump's pressure caused this, Taiwan's president and Taiwan Semiconductor's CEO said that the reason for the U.S. expansion was the massive demand for U.S.-produced chips, which have sold out production capacity through 2027. There is a huge demand for more chips, and Taiwan Semiconductor's management sees significant growth ahead. They expect AI-related chip revenue to increase at a 45% compounded annual growth rate (CAGR) over the next five years, with companywide revenue increasing at around a 20% CAGR. That's monster growth and makes for a fantastic stock to buy right now. When you hear about chip companies standing up new facilities, you should think of ASML, which makes extreme ultraviolet (EUV) lithography machines, which are critical in the manufacturing process of high-end chips. ASML is the only company in the world with the technology to do this, so it's a company that everyone must work with when they're expanding production capacity. By holding a technological monopoly, ASML is a great way to play the expansion of chip demand. With its stock off around 35% from its all-time high, right now makes for an excellent time to scoop up shares, as much better times are ahead for ASML. Although the sell-off hasn't been fun, it has opened up several fantastic investment opportunities in the market's best AI stocks. Now's a great time to pick up winning companies on sale.

My Top Artificial Intelligence (AI) Stock to Buy Today (Hint: It's Not Nvidia) | The Motley Fool

This sprawling technology giant can utilize AI across all of its subsidiaries. Attention has been centered on Nvidia (NVDA -1.51%) stock when it comes to the booming market in artificial intelligence (AI). The computer chip maker is now generating more than $100 billion in annual revenue and is valued as one of the largest companies in the world by market capitalization. I believe this intense focus on Nvidia means you should avoid the stock. There are so many minds trying to figure out what it will earn in 2025 that the stock is likely priced highly efficiently. The same can't be said of other AI stocks out there, of which there are plenty. One that springs to mind is Amazon (AMZN -4.33%), a technology giant and one of the largest Nvidia customers. Here's why Amazon is the best AI stock to buy for your portfolio right now. What makes AI so exciting for Amazon is how many different business lines can implement these new technologies. There are plenty of examples just in its e-commerce and retail division. In fulfillment centers, Amazon is now deploying hundreds of thousands of robots to help increase efficiencies. These robots will become much more efficient when updated with new generative AI "brains" that will help them operate seamlessly with each other. It has already deployed one futuristic warehouse in Shreveport, Louisiana, which has 10 times as many robots as existing Amazon warehouses. Or, take Amazon's advertising division, which now generates $56 billion in annual revenue. Brands can now use Amazon's AI image generator to help build better sponsored listings and advertisements across Amazon's various platforms. Advertising is highly profitable for Amazon, meaning the company should get a fantastic return on investment if AI helps grow revenue for this segment. Lastly, there are AI enhancements for consumers on the Amazon e-commerce marketplace. Customers can now interact with an AI assistant called Rufus to help find what they need in the endless Amazon catalog or get review summaries for products. This should lead to a better customer experience, resulting in more spending on the e-commerce marketplace. AI is going to directly help Amazon's cloud computing division called Amazon Web Services (AWS). Most of these new AI software tools require a ton of computing power for training and implementation, with companies such as Anthropic turning to AWS for these needs. AWS revenue accelerated to 19% year-over-year growth in the last three quarters and generated $107 billion in revenue last year. Management says it is still way behind in matching compute supply with all the demand from these AI start-ups such as Anthropic. Profit margins at AWS continue to amaze. The division had a 37% operating margin in 2024, generating more than half of Amazon's annual operating income in the calendar year. Margins may fall slightly as the cloud computing sector eventually matches supply with demand -- which typically leads to lower profit margins -- but AWS has posted sky-high profit margins for Amazon for many years. I expect this to continue in the future. Looking at the forward price-to-earnings (P/E) ratios of Amazon and Nvidia, the latter stock has an edge. Nvidia's forward P/E is 26.6 compared to Amazon's 32.4. Taking these numbers at face value, you might think Nvidia stock is a better buy for investors in 2025. However, smart investors know they need to take a longer view than one year when performing stock analysis. Nvidia has historically gone through many down cycles with its business, which lead to falling revenue and declining profit margins. While I don't know whether this will happen in 2025, it will happen eventually once the AI demand boom slows down. This will lead to a decline in its earnings, which are at an extended level due to its record-high operating margin in 2024. Amazon's operating margin is more likely to move higher than lower over the long term, which will help earnings grow at an aggressive pace. Consolidated operating margin was 10.75% in 2024. As AWS becomes a larger part of the business and AI efficiencies help in advertising and e-commerce, I think this figure can get close to 20% over the next few years. Assuming Amazon's $638 billion in annual revenue can expand to $800 billion in a few years, that is $160 billion in annual earnings for Amazon compared to $68.6 billion in 2024. Taking a longer view, Amazon's P/E ratio can come down much faster than Nvidia's with its potential for margin expansion compared to Nvidia's risk of margin compression. This operating leverage potential makes Amazon the best AI stock to buy for your portfolio today.

Should You Forget Nvidia and Buy These 2 Artificial Intelligence (AI) Stocks Instead? | The Motley Fool

It's becoming clear that artificial intelligence (AI) isn't going away. In fact, it looks like this revolutionary technology is only going to become an ever more important part of our daily lives. This trend has benefited Nvidia (NVDA -1.51%) tremendously. As the leading provider of graphics processing units that power AI applications, it has seen its sales and profits soar, which has helped its share price jump 1,830% in the past five years. Investors certainly want to get in on the action. But maybe there are better investment opportunities. Should you pass on Nvidia and buy two different AI stocks instead? Investors should consider buying shares in Alphabet (GOOGL -4.83%) (GOOG -4.89%) and Meta Platforms (META -4.22%), which are well off recently established all-time highs. These two companies have massive user bases. Alphabet's various properties, including Maps, Android, YouTube, Gmail, Chrome, and Gogle Search, as well as Meta's Facebook, Instagram, and WhatsApp, are incredibly popular. This broad distribution provides an important advantage, as Alphabet and Meta can constantly introduce new AI features for immediate adoption. Data on usage can be used to drive strategic direction on product enhancements. Alphabet integrates AI throughout its various offerings. Search has AI overview summaries, YouTube uses AI for content recommendations, and Google Cloud has AI tools that allow customers to build their own applications. Moreover, users have access to Meta's AI features to ask for info or to create images in its different social media apps. Both businesses generate the majority of their revenue from digital advertising efforts. It makes sense that they also offer AI tools to advertisers that improve targeting capabilities and aim to boost return on marketing spending. Combined, Alphabet and Meta generated $38 billion in free cash flow in the fourth quarter of 2024. And they ended last year with a cumulative $134 billion of net cash on their balance sheets. This proves that they are in an elite category of financially sound businesses that have the resources to continue investing aggressively in AI efforts. So, they're great stocks. But is it time to ignore Nvidia? Nvidia has experienced monster success. But it's not without some risks that investors shouldn't ignore. One risk is how concentrated the company's customer base is, leading to worrisome dependence on a few accounts. During fiscal 2025, 34% of Nvidia's revenue came from just three customers. It is believed that the top of the client list includes Alphabet, Meta, Amazon, and Microsoft. What's more, these four so-called hyperscalers are all working on developing their own AI chips. Another risk has to do with potential cyclicality. Nvidia's growth has been remarkable. But it can be worrying when you consider how much money is being spent on AI, to the tune of hundreds of billions of dollars planned for 2025. In a recessionary scenario, businesses could drastically cut their AI-related capital expenditures, which would negatively impact Nvidia's sales. And of course, we can't forget about competition. Nvidia has a dominant market share compared to rivals Advanced Micro Devices and Intel. However, newcomers could enter the industry, particularly from China, which means that Nvidia must continue operating at the top of its game. As of this writing, shares of Nvidia are trading 19% off their peak, which was established in January. Given the company's huge success, some investors might not believe the valuation is steep. Shares trade at a price-to-earnings (P/E) ratio of 41. But Alphabet and Meta are much cheaper. The former's stock trades at a P/E multiple of 21, while the latter can be purchased for a 26 ratio. On this basis, every other business in the "Magnificent Seven" list of stocks is more expensive. To be clear, Nvidia's shares could very well continue their ascent, so I wouldn't suggest ignoring it. However, I think Alphabet and Meta provide investors with the best value in the AI space today.

Nasdaq Correction: 2 AI Stocks Down 26% and 46% to Buy Before They Soar, According to Wall Street | The Motley Fool

AppLovin is currently 46% below its high. The median target price of $550 per share implies 104% upside from the current share price of $270. Here's what investors should know about Nvidia and AppLovin. Nvidia's invention of the GPU in 1999 revolutionized computer graphics, but those chips have since become the industry standard in accelerating complex data center workloads like artificial intelligence (AI). Nvidia has as much as 95% market share in AI accelerators, and analysts generally expect the company to maintain its dominance through the decade. The company reported exceptional financial results in the fourth quarter, beating estimates on the top and bottom lines. Revenue increased 78% to $39 billion on strong sales growth in the data center segment, driven by demand for AI infrastructure, and non-GAAP (generally accepted accounting principles) earnings rose 71% to $0.89 per diluted share. Nvidia stock plummeted following reports that Chinese start-up DeepSeek had trained sophisticated large language models at a fraction of what U.S. companies paid. Whether the company was completely honest in its cost estimates is questionable, but analyst tend to agree DeepSeek achieved some level of improved cost efficiency via innovative training techniques. Following those reports, investors understandably worried demand for Nvidia GPUs would not be as robust as previously expected. However, capital spending forecasts from major cloud services companies dispelled that concern to some degree. Additionally, CEO Jensen Huang recently said AI will need 100 times more computing power than anticipated at this point last year. Wall Street estimates earnings will increase 51% in fiscal 2026, which ends in January. That makes the current valuation of 38 times earnings look downright cheap. For context, Nvidia traded at 58 times earnings just before the ChatGPT launch started the generative AI boom. That seems nonsensical when Nvidia is arguably a much stronger business today. The market evidently expects earnings growth to decelerate hard in the future. But I believe the market is overestimating the extent of that deceleration, which creates an opportunity for patient investors. The AI revolution will be a multi-decade event, much like the adoption of e-commerce and cloud computing, and Nvidia is likely to be one of the biggest winners. AppLovin develops adtech software that lets mobile developers market and monetize their applications. The company also provides solutions that serve the same purpose for connected TV publishers, and it is currently building a similar product for e-commerce brands. Its software leans on a recommendation engine called Axon, which uses machine learning algorithms to target ad content in a highly effective manner. AppLovin reported strong fourth-quarter financial results. Revenue increased 44% to $1.4 billion, and GAAP net income soared 253% to $0.49 per diluted share. "During the quarter, our advertising business continued to drive increased performance for our mobile gaming partners, combined with positive early results for e-commerce advertisers during the holiday season," said CFO Matt Stumpf. Investors should be aware that several short-sellers have targeted AppLovin in recent weeks. Fuzzy Panda and Culper Research published short reports in late February, followed by Muddy Waters in late March. Allegations include data theft, illegal tracking, and backdoor installations. The Culper report even included a meme that reads, "The secret ingredient is crime." CEO Adam Foroughi responded promptly. In February, he rejected the allegations regarding app store policy violations, data theft, and illegal tracking. "The reports are littered with inaccuracies and false assertions," he wrote. And in March, he rejected claims of high turnover with the new e-commerce advertising product, saying it reached a billion-dollar run rate in mere months. "This isn't luck; it's a testament to our technology and execution," he added. Regardless, the short reports are a source of ongoing risk. AppLovin recently hired a legal firm to "examine the circumstances and motivations behind the dissemination of misleading or inaccurate information." In the meantime, Wall Street currently estimates earnings will grow 44% in 2025. That makes the current valuation of 58 times earnings look very reasonable. Investors comfortable with the risks should buy a few shares today.

Got $3,000? 2 Artificial Intelligence (AI) Stocks to Buy and Hold for the Long Term. | The Motley Fool

Artificial intelligence (AI) are two words many people have heard countless times over the past few years. AI isn't new; it has been around for decades. However, the growth and popularity of generative AI tools like ChatGPT and Google's Gemini have brought it mainstream. It seems most companies -- especially technology companies -- are rushing to introduce AI to its products and services, but not all companies will execute or benefit from the progression of AI similarly. The following two companies are notable exceptions. If you have $3,000 available after meeting all essential expenses, and want to invest in AI stocks, look no further. A $1,500 investment in each can expose you to two leaders leveraging AI in different but game-changing ways. Alphabet (GOOG -4.89%) (GOOGL -4.83%) is one of the more important AI players because of the research and infrastructure it has contributed to its development. One of its subsidiaries, DeepMind, isn't a household name like Google and YouTube, but it's behind some impressive AI advancements over the years. Google Search is Alphabet's bread and butter, and there have been some concerns that introducing AI Overview to it could be counterproductive because Google makes money when users click on ads, and AI Overview answers many questions people would usually have to click on a webpage for. In the fourth quarter of 2024, Google search made $54 billion, up 13% year over year (YOY). That's 56% of Alphabet's total revenue, so you can see why there are some fears about Alphabet cannibalizing itself and interrupting its proven business model. However, the benefits of AI for Alphabet's business will far outweigh any potential losses. GOOGL Revenue (Quarterly) data by YCharts. To start, Alphabet has a vertical approach to AI. It handles research, infrastructure, AI training, and app-building in-house. This is different from other big tech companies that rely heavily on third parties, which can limit their flexibility and ability to move at their own pace. Search aside, one of Alphabet's biggest businesses that stands to benefit from AI is its cloud platform, Google Cloud. It's the third-largest cloud provider in the world (and will likely stay third for a while), but the cloud services pie is large enough and growing fast enough for even it to flourish and scale impressively. After falling by over 11% this year through March 24, Alphabet's stock is as attractive as it has been in some months. There's no telling how the stock will play out in the short term, but it's well positioned to be a rewarding long-term investment. Cybersecurity has become an essential part of the modern business world, and CrowdStrike (CRWD -2.44%) is one of the main leaders in the industry. CrowdStrike is the pioneer of AI-native cybersecurity solutions, having led the charge since the 2011 release of its Falcon platform. Plenty of cybersecurity companies had traditional, on-premises products at the time, but CrowdStrike was the first to go at it from a pure cloud and AI approach. The company has admittedly had a rough nine months after causing the biggest IT outage in history back in July 2024, but its core cybersecurity products have attracted tens of thousands of customers, including being the preferred cloud security platform for over 60% of the Fortune 100. CrowdStrike's growth has also translated well to its financials. Its annual recurring revenue (ARR) grew 23% YOY to $4.24 billion, with $1.07 billion in free cash flow. These are signs that the company's subscription-based business model, which allows companies to choose specific solutions (identity, endpoint, cloud, etc.), is scaling effectively. CRWD Free Cash Flow (Annual) data by YCharts. CrowdStrike says its total address market (TAM) for its AI native solutions is currently around $116 billion, and it expects to grow to $250 billion by 2029. That's a compound annual growth rate of over 20%, so the growth chances are there. One leg up CrowdStrike has regarding AI and cybersecurity is the first-mover advantage. For AI to be as efficient as possible, it needs lots of data to be trained on, and CrowdStrike has been collecting relevant data for much longer than other competitors. The cybersecurity industry is here to stay, and so is CrowdStrike. It's an investment I'd feel comfortable holding on to for the long haul.

2 "Magnificent Seven" AI Stocks to Buy on the Dip | The Motley Fool

Artificial intelligence (AI) might be the best investment opportunity in years, perhaps in decades. According to Amazon CEO Andy Jassy, "Generative AI may be the largest technology transformation since the cloud (which itself, is still in the early stages), and perhaps since the internet." Wall Street has taken notice: Many AI, or AI-adjacent companies, have been on fire for the past two years, but they recently collectively took a bit of a dive due to industry-specific issues. Earlier this year, a China-based company called DeepSeek developed an AI chatbot with far less money and resources than some of the leaders in the field, which rocked the industry. Market wide headwinds have also played a key role in the recent dip. President Trump's trade wars could impact businesses across various sectors and harm economic activity. Though these headwinds are genuine, the recent drop represents a good opportunity to purchase shares of top AI stocks on a slight dip, at least for those with excellent prospects. That's the case with Apple (AAPL -2.67%) and Microsoft (MSFT -2.96%). These two are part of the so-called "Magnificent Seven" and are still excellent buy-and-hold options even with market caps near $3 trillion. Apple was a latecomer in AI. The tech company announced it would add a suite of AI features -- dubbed Apple Intelligence -- to some of its latest devices and operating systems. By the time it did, some companies were already earning meaningful revenue from their AI-related work. Further, Apple's grand entrance into the field didn't impress many investors and analysts. We are still waiting to see whether and to what extent it will lead to a renewal cycle for the company's iPhone and other gadgets. However, Apple often takes its time releasing tweaked versions of existing technologies -- the result is usually a hit. The iPhone wasn't the first smartphone, nor were AirPods or the Apple Watch the first of their kind -- but all of these products became incredibly popular. Apple has several strengths that could allow it to make noise in AI. First, it boasts a massive ecosystem of 2.35 billion active devices that's just begging to be monetized in umpteen different ways. Second, and relatedly, Apple has one of the strongest brand names in the world. Even if some of its AI-related initiatives aren't original, they could still attract significant attention because of the company's brand. Beyond AI, Apple will use its strengths to pursue many growth paths. It now supports more than a billion paid subscriptions within its services segment. Some of these are in industries with excellent long-term prospects, such as fintech. And as Apple's high-margin services unit grows in prominence, it will work wonders for its bottom line. Lastly, Apple is a solid income stock. The company has increased its dividend by 92% in the past decade, and its cash payout ratio is a very conservative 14%. At the time of this writing, Apple's shares are down by 12% this year, but the stock remains attractive to long-term investors. And those who choose to reinvest the dividend should see significantly higher returns. Microsoft invested in OpenAI, the company behind ChatGPT, years ago. The tech leader saw the lucrative AI opportunity coming from a mile away, and now it offers a suite of services through its cloud computing business. Microsoft Azure -- the tech giant's cloud unit -- has been one of its most significant growth drivers for a while, but AI is helping improve things. In the second quarter of its fiscal year 2025, ending on Dec. 31, Microsoft reported revenue of $69.6 billion, up 12% compared to the year-ago period. Azure's revenue increased by 31% versus the prior-year quarter, higher than any of Microsoft's other segments. According to management, the company's AI business now has an annual run rate of more than $13 billion. That seems like a drop in the bucket even compared to Microsoft's quarterly top line, but its AI business run rate increased by an impressive 175% year over year in the period. Further, we are still in the early innings of this industry -- and for that matter, of the cloud revolution, as Amazon CEO Jassy noted. So, Microsoft's efforts in AI should help drive strong results for a while. But the company has other things going its way. It remains the undisputed leader in computer operating systems. Its gaming segment is one of the world's leaders, and its suite of productivity tools is used across millions of businesses daily and benefits from high switching costs. Microsoft also has an incredibly strong name and a solid dividend. The company's payouts have increased by almost 168% in the past decade, while it boasts a cash payout ratio of just under 30%. Microsoft can offer growth and income to long-term investors who stay the course despite the company's 6% drop this year.

2 Artificial Intelligence Stocks You Can Buy and Hold for the Next Decade | The Motley Fool

Following the recent market pullback, a number of high-quality tech stocks based in artificial intelligence (AI) are now trading at more attractive prices. This is a great opportunity to purchase shares of these market-leading companies. Let's look at two AI stocks that investors can buy and hold for the next decade. While known for its Google search engine, Alphabet (GOOGL -4.83%) (GOOG -4.89%) has a strong collection of businesses. Google is still its prized possession and for good reason. It holds about a 90% global market share for search and is the world's largest digital advertising platform. While there are a number of AI-powered competitors looking to make inroads, none have the scale of users or network of advertisers that Google has. In addition, Alphabet owns YouTube, the most watched streaming service. As a stand-alone entity, YouTube is the fourth largest digital advertising platform in the world. The company's model of sharing advertising revenue with its creators reduces heavy upfront content spending and leads to strong profitability. Meanwhile, Alphabet is leaning heavily into AI. The company owns the world's third largest cloud-computing platform where it helps customers develop their own specialized AI models and applications through its Vertex AI platform. The platform enables customers to use Gemini or other foundational models as a starting point. Alphabet is also using Gemini to help improve its search results and power its AI Overviews. AI Overviews should eventually lead to new monetization opportunities. Historically, Google has only displayed ads on about 20% of its searches, with cost-per-click being a big source of its ad revenue. However, it uses other ad formats through its AdSense platform, such as display, text, and video ads, and could use these types of ads to generate revenue for its AI Overviews. It also operates the Gemini generative AI chatbot. While still behind some competitors, the chatbot is starting to improve and catch up. The company is also ahead in some AI areas, such as text-to-video, where its Veo 2 platform has demonstrated strong results, given its training on YouTube videos. In addition, Alphabet is leading the way in autonomous driving and robotaxis with its Waymo unit. It is currently the only company offering paid rides in the U.S. and has been expanding to new cities. It has also begun to take share in more established markets like San Francisco as customers become more comfortable with the technology. While Alphabet needs to drive down the prices of its technology, it is clearly the leader in this emerging space. Even further out, Alphabet is a leader in quantum computing with its Willow chip. Last year, the company made a major breakthrough in the space. One of the big issues with quantum computing is that it is error prone especially as it scales, but Willow has begun reducing errors as it scales. Quantum computing is still far from commercial applications, but this once again demonstrates how Alphabet is a technology-leading enterprise. The ability to innovate and adapt is the key for turning a tech company into a good, long-term investment. Like Alphabet, Microsoft (MSFT -2.96%) has a collection of market-leading businesses with strong AI ties. The company was one of the first big tech companies to embrace AI when it made a large investment in OpenAI, the maker of ChatGPT, and partnered with the start-up. Microsoft's use of OpenAI's AI models has helped drive its own cloud business, Azure. The platform provides customers with the infrastructure to train their own AI models while offering AI-powered analytics, security, and management tools. Though the business has been capacity-constrained, Microsoft is spending heavily building out data centers to keep up with demand. Meanwhile, the company has incorporated AI assistant copilots throughout its offerings. The biggest push has been with the copilots for its Microsoft 365 subscription service, which includes access to its popular work productivity tools, such as Word, Excel, and PowerPoint. The company is advancing how its copilots can help workers become more productive. A cost of $30 per month per enterprise user presents a big opportunity for the company moving forward. The company also recently added new security AI copilot agents, extending its market for AI copilots. While Microsoft has relied on OpenAI, it isn't standing still. It has been reported that the company is developing its own in-house AI reasoning models, as well as starting to work with other third-party models. This will help reduce its dependence on OpenAI and allow it to use its own AI models to help power its copilots going forward. Currently, Microsoft and OpenAI's partnership agreement runs through 2030, and the two companies remain close. However, the software giant is clearly looking ahead; having its own internal AI model options certainly gives it future leverage. Microsoft has also developed its first video game AI model called Muse. It will look for the AI model to help speed up new game development, as well as possibly preserve classic games that can be used on modern hardware. Gaming is a big business for Microsoft through its Xbox hardware and gaming studios, including Activision Blizzard. It will be exciting to see how it will incorporate AI into its games and make them better. While Microsoft continues to see solid growth through the help of its AI offerings, the possibilities of what comes next are what makes the stock attractive. The company has been very adaptive over the years, transitioning to a subscription-as-a-service model for its productivity software and then later as one of the first big tech companies to embrace AI. It is this ability to plan ahead and adapt that makes Microsoft a stock to buy and hold for a long time.

Nvidia Has 81% of Its $304 Million Stock Portfolio Invested in 3 Groundbreaking AI Stocks | The Motley Fool

The semiconductor giant Nvidia (NVDA -1.51%) is quite the company, developing high-end graphics processing units (GPUs) that help power artificial intelligence (AI) applications. Many investors view Nvidia as the picks-and-shovels play for AI, which would be pretty remarkable given how much AI is expected to change nearly all aspects of our daily lives. With a nearly $3 trillion market cap, Nvidia has grown so big that it has excess resources available to invest in other AI companies that it finds compelling or that it may partner or work with. At the end of its fiscal 2025 fourth quarter (ended Jan. 26), Nvidia reported that its stock portfolio totaled nearly $305 million, and 81% of the portfolio at the time was invested in these three groundbreaking AI stocks. Nvidia's position in Arm Holdings (ARM -4.16%) amounted to nearly $136 million at the end of Q4, or roughly 45% of Nvidia's stock portfolio. The position used to be even bigger, considering Nvidia sold over 850,000 shares in the quarter. Arm is a British semiconductor company that owns the intellectual property rights to the technology that powers many modern-day chips found in a range of technology devices made by some of the largest companies in the world. In 2020, Nvidia actually tried to buy Arm for $40 billion but regulatory roadblocks squashed the deal. The failed deal turned out to be a blessing in disguise for Arm because Nvidia invested in the company's initial public offering and Arm currently has a market cap of nearly $130 billion. The two companies have long collaborated, as Arm provides key technology that Nvidia has used in most of its chips including its next-generation Blackwell GPUs. Since Arm's initial public offering (IPO) in September 2023, shares of the company have more than doubled. In the calendar year 2024, revenue grew 27% from calendar year 2023, while diluted earnings per share have surged from $0.07 to $0.76. The stock has also held up compared to others in the AI sector and is only down about 4% this year. Still, it trades at about 76 times forward earnings and investors left its most recent quarter with concerns about future AI demand. This makes it a bit risky and its valuation a bit expensive, but if AI demand remains or accelerates, Arm will do well. Nvidia's position in the digital infrastructure company Applied Digital (APLD -6.23%) amounted to roughly $59 million at the end of Q4, or roughly 19.4% of the portfolio. Applied Digital builds data centers specifically for AI. These data centers are located near renewable energy sources, have liquid cooling capabilities, and are scalable to meet future demands. Applied Digital deploys Nvidia GPUs to make high-performance computing applications possible. In 2023, Applied achieved "elite partner" status in Nvidia's Partner Network. Elite partners receive priority access to Nvidia's products. It seems like it's in Nvidia's best interest for Applied to do well, so by funding the company it is essentially helping its own prospects as well. Applied is still losing money right now. For the six months ending Nov. 30, Applied reported a loss of $0.81 per share, compared to a $0.21-per-share loss in the same period one year prior. The stock has been volatile in recent months but analysts remain bullish. At the end of January, Compass Point analyst Joe Flynn initiated coverage of Applied Digital stock, assigning a buy rating and $10 price target, which implies about 33% upside from current levels (as of March 25). Flynn thinks there is a good chance that Applied Digital soon signs a data center deal with a large cloud provider like one of the "Magnificent Seven." Recursion Pharmaceutical (RXRX -2.76%) is not your typical AI infrastructure play, but rather a biotech company leveraging AI to achieve drug discovery in an innovative way. At the end of last year, Nvidia's position amounted to $52.1 million, or 17% of the portfolio. Recursion uses machine-learning algorithms and data to try to dissect biological relationships that lead to more efficient drug discovery. According to the company's annual report, Recursion has "one of the most sophisticated automated wet-laboratories in the world where robots and sensors help us conduct and digitize millions of real-life experiments each week, spanning cellular systems, chemical systems, tissue systems, and animal models." Recursion also said it has access to the fastest supercomputer of any biotech company. Similar to the companies above, Nvidia has also partnered with Recursion. In July 2023, Recursion announced a $50 million investment from Nvidia through a private investment in public equity (PIPE). Nvidia also provided the company with access to its technology. At the time of the PIPE, Recursion co-founder Chris Gibson said, "With our powerful dataset and NVIDIA's accelerated computing capabilities, we intend to create groundbreaking foundation models in biology and chemistry at a scale unlike anything that has ever been released in the biological space." Like a lot of young biotech companies, Recursion is still losing money, but it has a pipeline of 10 clinical and pre-clinical programs. Biotech stocks are the ultimate risk-reward plays because their success involves getting drugs approved and over the finish line before they run out of cash, effectively making them like start-ups. Recursion certainly seems to have some innovative technology and good partnerships in place, but I wouldn't recommend taking anything more than a smaller, more speculative position right now.

Here's the Next AI Stock I'm Buying | The Motley Fool

I haven't added too many artificial intelligence (AI) stocks to my portfolio -- yet. To put it mildly, some of the valuations in the megacap tech stocks have been difficult to justify, especially since I consider myself a value investor at heart. However, that's about to change in a big way. Chipmaker Advanced Micro Devices (AMD -3.10%), typically known by its initials AMD, has been beaten down over the past year or so, and is starting to look -- dare I say it -- cheap. Here's why I'm planning to open a significant position in AMD in my portfolio very shortly, and what I'll be watching going forward. AMD is often overlooked because of its distant-second market share to Nvidia when it comes to GPUs (graphics processing units) for data centers and other AI applications. First, while it's certainly true that AMD is a distant second in this market, the data center GPU space is big enough to have multiple winners. AMD's data center segment grew revenue by 94% year over year in 2024 and made up about half of the company's total revenue. AMD has picked up some impressive customers, such as IBM, which recently announced plans to use AMD's Instinct MI300X accelerators for generative AI applications. Plus, the data center industry itself is expected to grow by 140% by 2030, which should create a long-tailed stream of opportunities. Second, and most important, the data center business is just one part of what AMD does. Most notably, AMD is also a leading manufacturer of CPUs (central processing units) for laptop and desktop PCs, and just recently announced several new models from its Ryzen processor line. It develops GPUs specifically for gaming systems. And it makes chips for several other applications, such as for autonomous vehicles, a massive opportunity all by itself. AMD also has an excellent balance sheet, with over $5 billion in cash and very little debt, which gives it the flexibility to pursue growth opportunities and allocate capital where it will deliver the best returns. Recent results have been strong. Revenue grew 24% year over year in the fourth quarter of 2024, adjusted gross margin expanded by 300 basis points, and adjusted EPS increased by an impressive 42%. AMD has established an excellent track record since CEO Lisa Su took the helm in 2014. At the time, AMD was often thought of as the cheaper alternative to Intel when it came to PCs and was a generally small chipmaker. However, Su and her team completely revamped the business and have done a great job of capitalizing on the AI boom. In fact, AMD more than doubled its share of the CPU market from 11% the year Su took over to 24% in 2024 -- and there could be more room to grow. Long-term investors have been handsomely rewarded. AMD has delivered a total return of more than 3,000% in just over a decade under Su's leadership (and now has a market cap 70% greater than Intel's). AMD has several different growth levers, a massive market opportunity, and an excellent history of smart product decisions. With the stock trading for just 23 times forward earnings and at a discount of about 50% from its 52-week high, I'm excited to add this chipmaker to my portfolio in the very near future.

Down 17% From Its All-Time High, Should You Buy This AI Stock Right Now? | The Motley Fool

Volatility has been the single most prominent theme investors have dealt with in 2025. At one point, the closely watched S&P 500 index fell 10% from its peak, reaching correction territory. The market is not a fan of uncertainty, which there's a lot of right now. But there are opportunities out there to take advantage of. The latest market sell-off has hit some well-known large-cap tech stocks hard. In fact, there's one artificial intelligence (AI) stock that currently trades 17% off its peak (as of March 26), which was established in early February. Is it time to add this dominant business to your portfolio right now? Here are three reasons why that looks like a smart move. It's rare to see a company riding multiple secular trends. But this is precisely how to describe Amazon (AMZN -4.33%). It's the undisputed leader in online shopping, which still brings in most of the revenue. What's more, the business has top market share in cloud computing. Its Amazon Web Services (AWS) platform should keep benefiting from increasing interest to transition IT loads off premises. Then there's digital advertising, a segment that posted 18% revenue growth in the fourth quarter. This budding moneymaker is becoming a more important piece of the Amazon puzzle. And in terms of market share, it's only behind Alphabet and Meta Platforms. Favorable tailwinds have helped Amazon deliver strong revenue growth over the years. Sales in 2024 of $638 billion were more than 7 times higher than 10 years before. However, the management team has been focusing on building a more efficient organization. Controlling costs has resulted in improving profitability. This drove operating income to jump 86% in 2024. Over the next three years, Wall Street analysts see operating income rising at a compound annual rate of 20.8%. That outlook, which is quite robust, suggests faster growth for the bottom line than for revenue. This is something shareholders will appreciate. One other tech theme that should propel Amazon is artificial intelligence (AI). This technology helps shoppers find the products they are looking for when browsing Amazon.com. It also supports content recommendations within Prime Video. AWS is proving to be the company's major AI innovation center. It makes sense why. Businesses of all sizes that want to leverage AI are turning to AWS as their mission-critical tech infrastructure provider. AWS offers a wide range of AI tools, such as Transcribe (to convert speech to text), Bedrock (to build generative AI apps), and SageMaker (for data analysis), to name a few. This builds on ongoing efforts to make further progress on the hardware side of things. Amazon has developed, and sells, Trainium chips that support AI training and inference. During the Q4 2024 earnings call, CEO Andy Jassy mentioned that Amazon plans to spend more than $100 billion this year on capital expenditures (capex). "The vast majority of that capex spend is on AI for AWS," he said. This mimics the massive outlays other tech giants are undertaking to ride the AI boom. Critics don't hesitate to call this wasteful spending, as they believe capacity oversupply will flood the market with demand not being strong enough to support it. Whatever your opinion is, if history is any indication, Amazon's AI approach will follow its long-running strategy implemented by founder Jeff Bezos, which is to put customers and their needs first. With Amazon shares down 17% from their recent all-time high, investors are staring at an opportunity to add a dominant tech-forward enterprise, one that's at the forefront of AI innovation, to their portfolios. The valuation is reasonable, at a forward P/E ratio of 31.7. It's best not to overthink this situation. Buying and holding Amazon stock is a smart financial move.

A Market Downturn Creates a Perfect Entry Point for This Promising AI Player | The Motley Fool

Across the board, AI stocks had a difficult 2025. Some companies have lost hundreds of billions of dollars in value over the first three months of the year. But in the long term, the AI revolution looks stronger than ever. A decade from now, or even just a handful of years from now, demand for AI services will be considerably higher. And that makes Nvidia (NVDA -1.51%) a promising AI stock and a strong buy. When it comes to AI stocks, Nvidia is king. If you have monitored the space at all, you're likely very familiar with the company's growth prospects. Nearly every AI technology relies on heavy training and distributed computing power to function. The components that make this possible are called graphics processing units (GPUs). And when it comes to GPUs for AI technologies, Nvidia dominates with a market share of at least 70%. In areas like data centers -- crucial infrastructure that makes the AI revolution possible -- its market share is even higher. By betting on its stock, you're essentially exposing your portfolio to ground zero of the AI industry. In order for AI to continue advancing, the industry will continue to rely on the company's chips. Despite their higher price point, Nvidia chips are simply far superior to anything the competition has to offer. A lot of this has to do with Nvidia's early investment in the space. But it also stems from the 2006 introduction of CUDA, the company's proprietary parallel computing platform that allows developers to fine-tune its chips for specific tasks. This not only created performance benefits over time, but also customer lock-in. As developers used CUDA more, customizing their environments to adapt to its potential benefits, their own products and services became entrenched into Nvidia's ecosystem, creating a level of stickiness that keeps customers coming back for its chips each year. Despite a historic rise in recent years, Nvidia shares have experienced a rare drop so far in 2025, falling by nearly 20%. Could this be your chance to buy into this long-term AI superstar at a discount? It is incredibly difficult to value a stock like Nvidia. Sales are growing by leaps and bounds, but most of its growth is likely still ahead of it. And what exactly the AI industry will look like a decade from now -- nonetheless how large it will get or how quickly that growth will transpire -- is largely anyone's guess. But we can glean some clues by comparing Nvidia with another large chipmaker with AI aspirations: Advanced Micro Devices, colloquially referred to as AMD. Nvidia's valuation has come down from its highs set in 2021 and 2024, at least in terms of its price-to-sales ratio (P/S). You can also see that Nvidia's fall in 2025 isn't unique. Other chipmakers, such as AMD, also saw their valuations trimmed. And while Nvidia shares are priced three times higher than AMD's on a price-to-sales basis, its growth next quarter is expected to be more than double, while its increases in 2023 and 2024 were truly impressive. Still, there's no doubt that Nvidia shares are expensive at 21.6 times sales, especially given the company's market cap of nearly $3 trillion. And although its current product lineup is priced at a premium versus the competition, that may not always be the case. Rivals AMD and Intel are investing heavily to catch up in chip performance, and there's even the possibility that the companies merge to better take on NVidia in the long term. For now, investors bullish on AI should consider taking a diversified approach. Nvidia looks like a great purchase for patient investors willing to sit through the volatility. But don't forget that the AI revolution likely won't be built on a single company's products. Competition will emerge, and diversifying with other publicly traded chipmakers can help your portfolio bet on the rise of AI in general, versus the prospects of one business in particular.

2 Artificial Intelligence (AI) Stocks to Buy Before the Next Stock Market Swing

Last year, artificial intelligence (AI) stocks were skyrocketing in value. Over the first three months of 2025, however, many of these growth superstars saw their valuations cut severely. If you're adding AI stocks to your portfolio, strongly consider adding Nvidia (NVDA -1.51%). If you already own Nvidia stock, consider buying even more. When it comes to companies that will benefit from the AI revolution, Nvidia is king. You may already know why Nvidia is the king of the AI revolution. The company produces GPUs, critical components that make developing, training, and executing AI services possible. Not only is Nvidia a supplier of critical components to the AI industry, but it is in many ways the preferred supplier. Its chips, despite being priced at a premium, can perform better than the competition thanks to early investment by Nvidia's management team. While estimates vary, most peg Nvidia with at least a 90% market share in data center GPUs, one of the biggest verticals to support the AI industry. Since 2025 began, Nvidia stock fell nearly 20% in value. Shares are still expensive at 21 times sales, but remember: The AI revolution is just getting started. Not only does Nvidia have a heavy lead on the competition, giving it more investable resources to maintain its edge. But it also has impressive vendor lock-in through developer environments like CUDA, an architecture that allows customers to customize Nvidia chips to their specific needs, making it more likely that they will stick with Nvidia's ecosystem. With sales expected to grow by 57% this year and another 24% next year, Nvidia stock is still "cheap" for investors willing to stomach the upfront premium, allowing long-term growth rates to make that premium look like a steal in hindsight. Get maximum growth with this tiny AI business Nvidia should be a core part of every AI investor's portfolio. But as a multitrillion-dollar business, Nvidia' growth potential is somewhat capped due to sheer size constraints. If you want maximum upside potential -- I'm talking about 1,000% or more -- consider a smaller AI competitor like SoundHound AI (SOUN -4.22%). Unlike Nvidia, SoundHound isn't a supplier to the AI industry. Instead, it's more of a pure-play AI company. In a nutshell, its business model relies on creating AI services that deal with sound. For instance, fast-food chains might want to replace drive-thru operators with AI agents. Or, more commonly, a business might replace human customer support agents with agents powered by artificial intelligence. Even your car is a potential use case, with AI increasingly being integrated into vehicle sound systems to allow you to chat with your car about maintenance needs, music requests, or hands-free calls and texts. NVDA PS Ratio data by YCharts SoundHound has been in business for two decades, and has amassed several hundred patents. But its business isn't just theoretical. Dozens of well-known brands have signed up as customers to pilot the technology, allowing the company to grow sales considerably in recent quarters. Sales growth next quarter is expected to top 166% -- more than double Nvidia's growth rate. Of course, investors must pay for these higher growth rates with a higher price-to-sales ratio. But with a market cap of just $3.5 billion, it's very reasonable to expect SoundHound to grow at these rates for far longer than Nvidia can manage. I still have some major concerns with the company's long-term competitiveness. Big tech is investing a lot into AI, including the audio category that SoundHound specializes in. With a research and development budget of just $70 million per year, it's not clear that SoundHound can beat the multibillion-dollar budgets that big tech competitors have over the long term. But if you're looking for maximum growth potential despite a bit of added risk, SoundHound is a great speculative bet.

Did Apple Just Give Nvidia Investors 1 Billion Reasons to Celebrate? | The Motley Fool

Apple's recent moves in AI infrastructure could bode well for Nvidia. For the last couple of years, megacap technology companies have dominated the artificial intelligence (AI) narrative. Microsoft turned heads with its $10 billion investment in ChatGPT maker OpenAI. Amazon swiftly followed, pouring $8 billion into a competing platform called Anthropic. And then there's Alphabet, which just made its largest acquisition of all time -- a $32 billion purchase of cybersecurity firm Wiz. As smart investors know, cybersecurity has become a major use case in AI applications for Alphabet's cloud platform over the last two years. While these billion-dollar deals are exciting, no company has benefited more from AI tailwinds than Nvidia (NVDA -1.51%). The company's graphics processing units (GPUs) are considered the gold standard for developing generative AI, and big tech just can't get enough. With all of this said, one "Magnificent Seven" member that has been suspiciously quiet during the AI revolution is Apple. Sure, the company has released a new iPhone model and developed a tool integrated with OpenAI called Apple Intelligence. But so far, the company's foray into the AI realm has been underwhelming during an otherwise generationally exciting period for technology. Well, that may have just changed. Despite its later-than-anticipated arrival to the AI party, reports are swirling around some major moves related to Apple that should excite Nvidia investors in particular. Let's dig in and assess why Nvidia looks poised to continue dominating the AI landscape for years to come. Loop Capital Markets analyst Ananda Baruah recently released a client note in which he suggested that Apple is in the process of purchasing 250 Nvidia GB300 NVL72 servers for an estimated price of around $1 billion. While precise details around any new partnerships between Nvidia and Apple are still unfolding, I find the timing of Baruah's report interesting. Earlier this month, Apple turned heads after the company announced its plan to invest $500 billion over the next four years into areas such as manufacturing and advanced silicon engineering. While Apple's press announcement for this infrastructure commitment did not specifically reference Nvidia, I see the company's decision around these investments as a bullish indicator for the chipmaker regardless. My reasoning for that is Apple's announcement echoes the plans of its megacap cohorts. Earlier this year, Amazon, Microsoft, and Alphabet each announced plans to continue investing heavily into AI infrastructure. Collectively, these cloud hyperscalers are forecasting more than $250 billion of capital expenditure (capex) spend just for this year. When you layer the $65 billion that Meta Platforms plans to invest, AI infrastructure from big tech eclipses far more than $300 billion for 2025. Considering each of these companies leverage Nvidia's GPUs to train their AI models, I see the continued investments in infrastructure as a strong indicator for Nvidia's growth prospects. What makes the rumors around Apple's server deal particularly exciting is that the GB300 NVL72 servers integrate Nvidia's next-generation GPU architecture, the Blackwell Ultra. Given the successful launch of the Blackwell series chipsets so far, I see the combination of rising capex from big tech plus Apple's ambitions in AI manufacturing as robust tailwinds for Nvidia over the next several years. To be honest, it's hard to know with any real accuracy how much of the increased AI infrastructure spend I outlined above will be allocated toward Nvidia. With that said, the analyst forecasts below can still help paint a picture of what could be in store for Nvidia over the next few years as big tech ratchets up its capex spend. As the figures above indicate, Wall Street's consensus estimates suggest that Nvidia's revenue and earnings should continue accelerating over the next few years. This is an important dynamic to understand, as Nvidia plans on releasing even more GPU architectures over the next couple of years. In other words, despite the company's rapid spend across research and development (R&D), analysts are projecting even further revenue growth supported by rising profits. This could suggest that Wall Street is optimistic that Nvidia will continue dominating the AI infrastructure landscape -- holding onto its enviable pricing power over competitors and generating robust unit economics over the long run. Despite the optimistic outlook, shares of Nvidia have gotten punished during the ongoing Nasdaq sell-off. I'll concede that ongoing uncertainty around tariffs, as well as some recent developments surrounding export controls in China are likely to bring some near-term headwinds to Nvidia stock. But the long-term outlook supported by continued investments in AI infrastructure has me bullish over the company's long-term picture. Right now, Nvidia is trading for just 25 times forward earnings -- approximately half its level seen just a couple of months ago. In my eyes, long-term investors are currently presented with a rare opportunity to invest in AI's top darling at a historically cheap valuation.

My Top Artificial Intelligence (AI) Stocks to Buy Right Now | The Motley Fool

For more than two years, nearly any stock tied to artificial intelligence (AI) was sizzling hot. That's no longer the case. Several AI stocks have plunged by double-digit percentages so far in 2025. Should investors throw in the towel? Not if they don't want to miss out on potentially huge returns. I like quite a few AI stocks, but here are my top picks to buy right now. Some see Google parent Alphabet (GOOG -4.89%) (GOOGL -4.83%) as something of a dead company walking. They think generative AI presents an existential threat to Google Search. They believe regulators will seriously hamper Google's ability to compete. I not only disagree; I view Alphabet as a fantastic AI stock for long-term investors. Importantly, Alphabet isn't running and hiding from generative AI. Instead, the company is embracing it. Chatbot Arena ranks Google Gemini version 2.5 Pro as the No. 1 overall large language model (LLM) as well as the best at math, instruction following, creative writing, handling longer queries, and more. Gemini is already incorporated into Google Search through AI Overviews, which is driving higher search usage and user satisfaction. Thanks in part to Gemini, Google Cloud is the fastest-growing cloud services provider among the major players. I expect the unit to remain an important growth driver for Alphabet in the future. I also like Alphabet's Waymo self-driving car business. UBS predicts that Waymo is poised to dominate the fast-growing autonomous ride-hailing (robotaxi) market. The investment bank believes that Waymo is so far ahead that most of the world's automakers will eventually adopt its technology. Google Cloud is the fastest-growing cloud services provider, but Amazon (AMZN -4.33%) is the biggest with its Amazon Web Services (AWS) unit. I think AWS will continue its reign and continue to grow rapidly, even if the pace of growth is lower than some of its rivals. Amazon CEO Andy Jassy said in the company's fourth-quarter earnings call, "[I]t's hard to overstate how optimistic we are about what lies ahead for AWS' customers and business." He predicted that nearly every app will incorporate generative AI within the next few years, with most companies using AI agents. I believe his vision of the future is spot on. And I agree with Jassy that AWS is well-positioned to be one of the top winners. While Amazon is an AI leader in its own right, it's also a major investor in one of the top up-and-coming AI innovators -- Anthropic. I'm bullish about Amazon's stake in Anthropic. The smaller company's Claude ranks as one of the most powerful AI models around. Anthropic also recently announced it has made important breakthroughs in understanding how LLMs think, which could pave the way for developing even better models. I'd be remiss if I didn't mention Amazon's e-commerce business. Although the company is the 800-pound gorilla in e-commerce, I think it still has plenty of room to grow. Amazon's AI initiatives should help improve profitability and make its ecosystem more sticky for customers. Nvidia (NVDA -1.51%) stock has been absolutely hammered this year. Does this present a buying opportunity? I think so. Sure, Nvidia's growth is slowing. The company faces challenges from Chinese regulators and the Trump administration's trade policies. Competition is increasing for Nvidia's GPUs, including from customers such as Amazon and Google. Despite these issues, though, the fact remains that Nvidia makes the most powerful AI chips available. Its new Blackwell platform should drive robust growth this year, with newer technology on the way soon. There's also one positive side effect of Nvidia's steep sell-off: Its valuation looks much more attractive. Granted, Nvidia's shares still trade at over 25 times forward earnings. However, its price-to-earnings-to-growth (PEG) ratio is a reasonable 1.1. I think investors who buy this AI stock on the pullback will be glad they did within a few years.

Nasdaq Sell-Off: After Losing Nearly $800 Billion in Market Cap, Is Nvidia Stock a Buy Anymore? History Offers a Clear Indicator of What Could Happen Next. | The Motley Fool

On Jan. 6, shares of semiconductor powerhouse Nvidia (NVDA -5.23%) closed at an all-time high of $149.43. At the time, the company's market capitalization hovered around $3.7 trillion. But these highs were fleeting. Throughout 2025, a wicked mixture of new tariff policies, mixed economic data, unknowns about the Federal Reserve's ongoing policies, and even an emerging artificial intelligence (AI) start-up out of China called DeepSeek have contributed to an epic sell-off in Nvidia stock. As of this writing, its market cap is $2.9 trillion -- down $800 billion from highs seen just a couple of months ago. With investors souring on Nvidia, is the stock still a buy? Let's dig in and find out. About a month ago, Nvidia reported earnings for its full fiscal 2025 (ended Jan. 26). Once again, the company's computing and networking segments were the shining stars. Those two segments make up most of Nvidia's business, capturing the company's graphics processing units (GPUs), which are an increasingly important component for AI data centers. The entire data center business generated $115 billion in revenue, up 142% year over year. Within this category, sales from computing soared by 162% while the company's networking business rose by 51% year over year. During the fourth quarter, data center revenue reached its highest level on the year at $35.6 billion, nearly double the fourth quarter in the prior year. One of the major contributors at the end of the year was the highly successful launch of its next-generation GPU architecture, called Blackwell. A number of influential players in the AI realm have recently started sharing their spending plans, which could help shed some light on Nvidia's prospects. For example, Apple announced that it will be investing $500 billion over the next four years into areas including silicon engineering and manufacturing. And Taiwan Semiconductor Manufacturing -- which makes Nvidia chips -- is expanding its footprint in the U.S. with its own $100 billion infrastructure investment. Lastly, cloud computing hyperscalers Amazon, Microsoft, and Alphabet are all committing to increase capital expenditures, forecasting more than $250 billion of AI infrastructure spending just in 2025 alone. While each of these companies has its own priorities, all of them work closely with Nvidia in some form or fashion -- from manufacturing to outfitting their data centers with chips. Given the nearly $1 trillion of infrastructure spending planned for the next several years, I see its growth prospects as highly compelling. As I've written before, I use Nov. 30, 2022, as my start date for the AI revolution. This is the day that OpenAI commercially released ChatGPT. Since that date, Nvidia stock has risen by 615%. Given gains of this magnitude, you might be inclined to think that its best days are behind it. However, the chart above shows an interesting trend. Although the stock has risen considerably over the last few years, there have been some notable dips. And yet, as the chart makes clear, sell-offs in the stock are generally brief, and it historically rebounds to new highs. I think that even with its parabolic gains, the stock is poised to bounce back. What's even better is that shares are trading for a historical discount right now. The company's forward price-to-earnings multiple (P/E) of 26.7 is well below its three-year average and 47% off its high over this period. Considering that the business is operating at record levels, the secular tailwinds suggesting that the company remains positioned to capture rising AI infrastructure spending, and the stock's historical resiliency, I think now is a great opportunity to take advantage of the sell-off and buy Nvidia shares while they are on sale.

This Artificial Intelligence (AI) Stock Is a "Magnificent Seven" Leader. But Is It a Buy? | The Motley Fool

There aren't many technology companies that can claim they've been a leader in artificial intelligence (AI), but Microsoft (MSFT -2.96%) can do so easily. The tech giant made early investments in OpenAI, giving it early access to ChatGPT, and has been quick to implement AI into its products and services. But even with Microsoft's moves, the company's share price has tumbled about 9% over the past six months. A general sense of concern for the economy may be fueling the drop, but rising competition in the AI space from smaller AI companies, including DeepSeek, may be fueling pessimism that large tech companies will remain on top of the AI hill. So what should investors think of Microsoft right now? I think there are a couple of compelling reasons why Microsoft stock is a buy. Microsoft's early move to integrate AI into its cloud offerings is already paying off. In the first quarter (which ended Jan. 29), Microsoft's Intelligent Cloud revenue jumped 20% to $24.1 billion, driven in part by a 33% jump in Azure cloud sales. This is notable because Microsoft is the second-largest cloud infrastructure company, behind Amazon. Microsoft has been gaining on Amazon for years and now has 21% of the market, compared to Amazon's 30%.The cloud was important before artificial intelligence came along, but AI has vastly expanded its value. Goldman Sachs estimates global AI cloud revenue could reach $2 trillion just five years from now. Microsoft CFO Amy Hood said on the earnings call that Azure's AI service jumped an impressive 157% from the year-ago quarter, saying the growth "was ahead of expectations even as demand continued to be higher than our available capacity." All this should give potential investors an idea of just how successful Microsoft has been in integrating AI into its cloud services and how it's positioning itself to benefit from this segment for years to come. In addition to Microsoft's current benefits from AI cloud computing, the company is tapping into the fast-growing AI agent space. AI agents can perform tasks with relative autonomy, like making reservations or fielding customer service calls, and Microsoft is already seeing the benefits. More than 160,000 organizations have already used Microsoft's Copilot Studio to help build 400,000 AI agents in the first quarter alone, up more than 2X from the year-ago quarter. That's helped Microsoft's 365 service grow, with Microsoft CEO Satya Nadella saying on the recent earnings call, "We are seeing accelerated customer adoption across all deal sizes as we win new Microsoft 365 Copilot customers and see the majority of existing enterprise customers come back to purchase more seats." While we're still in the early innings of agentic AI, Nvidia CEO Jensen Huang believes it could be a "multitrillion-dollar opportunity." Microsoft considers its 365 Copilot platform the "UI for AI," meaning the user interface for how people interact with AI, and users' rapid adoption of Microsoft's platform for building AI agents shows just how well the company is tapping into this fast-growing, potentially lucrative space. As a leading cloud computing company that's rapidly expanding its AI offerings and a dominant services company that's successfully growing its AI agent tools, I think Microsoft is a compelling AI stock to buy right now. The stock looks even more attractive considering it's down about 9% over the past six months. This is giving investors an opportunity to pick up Microsoft shares at a relative discount. The company's stock now has a forward price-to-earnings multiple of about 26.3, down from 33.6 at the beginning of the year. Therefore, investors looking for a clear AI leader that's taking a breather in the market right now should consider starting a position in Microsoft before some of these AI tailwinds kick in.

Veteran fund manager offers blunt take after Nvidia stock drop

The artificial intelligence spending frenzy has catapulted Nvidia's share price and turned Nvidia into a household name akin to Google and Apple. There's been a tsunami of interest in AI research and development following the highly successful launch of OpenAI's ChatGPT in 2022, and, as a result, demand for Nvidia's high-end semiconductors, which are better suited to handling the heavy workloads associated with training and operating AI programs than CPUs traditionally found in networks, has ballooned. Investors have profited handsomely from the revenue and profit growth. Nvidia's stock price has gained a remarkable 660%, including a 171% return in 2024, since 2022. Related: AI CEO issues grave warning about the future of Nvidia Those returns have been game-changing for many, but it's been much rockier in 2025. Shares are down 25% since their peak on January 6 on worries demand for its next generation graphics chips are peaking. Nvidia's drop has surprised a lot of investors, but long-time Wall Street hedge fund manager Doug Kass isn't among them. In December, Kass predicted Nvidia's rally would "abruptly end" in 2025 as "it grows clear that double and tripling ordering buoyed the company's past reported top and bottom lines." Kass's prescient prediction stems from experiencing more than his share of good and bad markets over a 50-year career, including as research director for Leon Cooperman's Omega Advisors. He's seem plenty of great stocks come and go over the years, making his latest words on Nvidia's stock worth considering. Nvidia benefits from massive AI-driven demand Artificial intelligence isn't a new concept. The prospect of computers thinking for themselves has been the subject of conversation since mathematician and computer scientist Alan Turing researched designing AI computers and the Rand Corporation created the first AI program in 1950s. Related: Fund manager who correctly predicted stocks rally delivers blunt 8-word update Many science fiction books and movies, from Isaac Asimov's iRobot to The Terminator and others, have explored AIs risks and benefits over the past 70 years. However, only recently has AI's impact on people and business gone mainstream thanks to ChatGPT and the success of competing large language models, including Alphabet's Gemini. Banks like JP Morgan Chase are using AI to hedge risks, drugmakers are examining its use in developing medicines, retailers are evaluating whether it can curb theft and improve supply chains, and militaries are exploring AI's use on the battlefield. Every day, millions of Americans are turning to AI chatbots to answer questions and succinctly explain topics, and increasingly, businesses are deploying agentic AI programs to complement or replace workers. To tap into increasing use, big technology companies are plowing incredible sums into IT budgets. For instance, Microsoft, Google, and Amazon capital expenditures were $192 million last year, up from $117 billion in 2023. A lot of those extra dollars went to Nvidia to access its software and graphic processing units, or GPUs. Sales of H100, H200, and the latest Blackwell AI chips have catapulted annual revenue to over $130 billion (up 114% year-over-year) from $27 billion in 2023. Meanwhile, net income has increased to nearly $73 billion from less than $5 billion in 2023. Nvidia encounters speed bumps in 2025 Nvidia markets its AI chips globally, but a key market, China, has shrunk following strict export regulations designed to limit the sale of next-gen technology from U.S. companies to potential rivals overseas. China represents about 10% Nvidia's data center sales, and according to CEO Jensen Huang, that's "about half of what it was before the export control." Nvidia is also facing competition, including from Advanced Micro Devices and specially designed chips made by Broadcom and others. More Nvidia: In 2024, AMD's data center segment sales totaled a record $12.6 billion, prompting CEO Lisa Su to say, "Looking into 2025, we see clear opportunities for continued growth based on the strength of our product portfolio and growing demand for high-performance and adaptive computing." Su has predicted the AI-GPU market will grow by an average of 73% annually to $400 billion through 2027. Another concern is that Nvidia demand is inflated by companies over-ordering in hopes of getting allocated hard-to-get chips. And worry is mounting that overbuilding capacity will become increasingly evident following the launch last month of DeepSeek, a Chinese ChatGPT rival that was reportedly developed using older chips for just $6 million. If those concerns weren't enough, Nvidia's profit margin has recently been pressured by ramping capacity of its latest Blackwell chips. In the fourth-quarter, gross margin shrunk to 73% from 76% a year earlier. Veteran fund manager offers blunt warning Kass considers himself a "contrarian with a calculator." He's most comfortable buying stocks when others are selling. Despite Nvidia's poor performance this year, he still thinks there may be more pain to come. "People are buying four times more infrastructure than they need. The better the GPU, the higher the failure rates and this fragility causes significant cluster under-performance with high cost," wrote Kass in his TheStreet Pro diary. Kass's research suggests Nvidia's solution to failure rates is buying more to compensate, a strategy that certainly doesn't sound overly sound. "This stuff is incredibly expensive and not working right (obviously) and NVDA is just resorting to - "BUY MORE OF WHAT AIN'T WORKING!" There is massive negative return on investment to the current architecture; how does spending more money solve that problem?," said Kass. If Kass is correct that hyperscalers like Amazon and Microsoft have been investing too greedily in AI capacity, then it wouldn't be shocking if there's a major reset in IT budgets, and that wouldn't be good news for Nvidia. Adding to that concern are recent reports that Microsoft, one of the largest hyperscalers, is reining in some of its data center projects. According to TD Cowen, Microsoft has cancelled or deferred data center leases on capacity concerns. Related: Veteran fund manager unveils eye-popping S&P 500 forecast

Nvidia Remains a Buy on AI Growth Prospects Despite Technical Red Flags | Investing.com UK

I recently returned from NVIDIA's GTC AI Conference in San Jose, California. This year's event was completely sold out, with an estimated 20,000 investors, engineers and business leaders in attendance. CEO Jensen Huang likes to call the annual get-together the "Super Bowl of AI," and after seeing his keynote, I understand why. Despite NVIDIA Corporation (NASDAQ:NVDA)'s stock flashing a bearish "death cross" -- its 50-day moving average slipped below the 200-day moving average for the first time since January 2023 -- the energy at the conference was electrifying. Every major industry was represented, from health care to defense, signaling that artificial intelligence (AI) is expanding at a white-knuckle clip.During his approximately two-hour presentation (and he didn't use notes!), Huang described a future where AI agents will transform entire industries, making businesses more efficient, aerospace and defense more advanced and markets more intelligent. In other words, if you thought ChatGPT was impressive, you haven't seen anything yet. Huang spoke extensively about "agentic AI," or AI that doesn't just retrieve data but perceives, reasons and acts on your behalf. In his example, AI agents "can go to a website, interpret words and videos, maybe even play a video, learn from it, understand it -- and then use that new knowledge to complete its task." To understand this better, imagine you work on Wall Street. An AI agent could scan earnings reports, build models and execute trades faster than a human could. In health care, AI agents will be able to diagnose diseases, assist in surgeries and manage hospital logistics -- all with limited human supervision. Perhaps the biggest impact will be in aerospace and defense. Huang made a bold prediction: "Everything that moves will be autonomous." This suggests a future with AI-powered drones, cybersecurity defense systems, battlefield robots and much more. The U.S. military is already testing AI systems that can independently identify threats and make tactical, split-second decisions in real-time. As I shared with you last month, the global AI market in aerospace and defense is projected to surge from approximately $28 billion today to $65 billion by 2034, according to one research firm. That's a solid 9.91% compound annual growth rate (CAGR). North America alone represents $10.43 billion of this market, and it's growing even faster at 10.02% annually. Trump's Pro-AI Policies and NVIDIA's Strategic Shift Under President Trump's administration, there's been a concerted effort to boost American leadership in AI. One such initiative is the Stargate Project, a collaborative venture involving OpenAI, SoftBank (TYO:9984), Oracle (NYSE:ORCL) and MGX, which aims to invest up to $500 billion in AI infrastructure across the U.S. by 2029. Aligning with this vision, NVIDIA has unveiled plans to invest hundreds of billions of dollars in U.S.-based manufacturing over the next four years. The move seeks to reduce reliance on Asian supply chains, particularly in light of tariff uncertainties. Speaking to the Financial Times last week, Huang remarked that, over the next four years, NVIDIA will buy "probably half a trillion dollars' worth of electronics in total." He added that he can see the company "manufacturing several hundred billion of it here in the U.S." Even with all the excitement, NVIDIA's stock has formed a death cross, a technical pattern that typically signals near-term weakness. But let's put things in perspective. After meteoric runs in 2023 (when it was up 238%) and 2024 (up 171%), some consolidation is natural, if history is any guide. Also, every Magnificent 7 stock, except Facebook-parent Meta Platforms (NASDAQ:META), is underperforming the S&P 500 year-to-date. I believe these dips can present buying opportunities. NVIDIA's fundamentals remain incredibly strong. In the fourth quarter of 2024, the company reported record revenue of $39.3 billion and record data center revenue of $35.6 billion. It also reported record full-year revenue of $130.5, more than double the amount generated just a year earlier. Sitting in the audience at NVIDIA's GTC Conference, I could feel the same energy that surrounded the dot-com boom, the rise of mobile computing and the emergence of cloud technology. Despite near-term market fluctuations, the investment case for AI remains rock solid. It's clear to me that companies that build AI, use AI or enable AI infrastructure will shape the global economy in the decades to come. ***** All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor. By clicking the link(s) above, you will be directed to a third-party website(s). U.S. Global Investors does not endorse all information supplied by this/these website(s) and is not responsible for its/their content. Holdings may change daily. Holdings are reported as of the most recent quarter-end. The following securities mentioned in the article were held by one or more accounts managed by U.S. Global Investors as of (12/31/2024): NVIDIA Corp (NASDAQ:NVDA)., Microsoft Corp (NASDAQ:MSFT)., Alphabet (NASDAQ:GOOGL) Inc., Tesla (NASDAQ:TSLA) Inc.