Nvidia (NVDA) has had a remarkable year, with its stock price soaring above $1,000 and becoming the world’s second most valuable company after Apple. The company’s dominance in artificial intelligence (AI), which is expected to expand from $200 billion today to over $1 trillion by the end of the decade, has driven this growth.
Nvidia’s AI chips are fast and powerful, making them essential for tasks like training and inferencing models. The demand for these products and services has surpassed supply, contributing to Nvidia’s success. This has led to an impressive 173% gain in the stock price so far this year.
In addition to its AI success, Nvidia’s expansion into other industries using its graphics processing units (GPUs) has also been key to its growth. The company has committed to updating its older products, ensuring seamless integration with newer ones and maintaining customer investment.
Nvidia recently joined the Dow Jones Industrial Average (DJIA), replacing Intel, a chipmaker struggling in recent years. This milestone is a testament to Nvidia’s success, but it’s essential to examine the company’s earnings picture and future prospects rather than just its invitation to join the index.
With record revenue of $30 billion in the most recent quarter and margins over 70%, Nvidia is well-positioned for continued growth. The company predicts gross margin in the mid-70% range for the full year, suggesting a promising outlook. Despite trading at 47 times forward earnings estimates, Nvidia’s stock looks reasonably priced.
Given its explosive growth, wide margins, and high demand for products and services, Nvidia appears to be an excellent investment opportunity today.
Source: https://www.fool.com/investing/2024/11/04/nvidia-to-join-dow-average-should-you-buy