Nvidia’s shares have risen by 179% so far in 2024, driven by strong artificial intelligence (AI)-related growth and a high price-to-earnings ratio of 55. The company’s new Blackwell generative AI architecture platform is expected to trigger the next wave of demand for its GPUs, but it may not fully ramp up until the middle of next year.
Despite this, Nvidia’s third-quarter revenue grew 94% year over year, driven by double-digit growth in its data center, gaming, professional visualization, and automotive segments. The company’s data center business saw a significant increase, with revenue rising 112% year over year to $30.8 billion.
The demand for Nvidia’s current-generation Hopper GPUs remains “exceptional,” with cloud service providers making up half of the company’s data center sales last quarter. This has helped Nvidia price its products at incredible margins, resulting in a trailing-12-month net income of $63 billion.
Gaming revenue also saw strong growth, increasing 15% year over year to $3.3 billion, driven by back-to-school sales and holiday demand for GeForce RTX-powered computers.
Analysts expect Nvidia’s revenue to grow between $39 billion and $40 billion next quarter, representing a 72% year-over-year increase. The company is preparing to ship more Blackwell chips, but management expects this may not fully hit its stride in terms of revenue contribution until the middle of next year.
Overall, demand trends look solid for Nvidia, with the demand for Hopper products and gaming fueling another strong quarter to finish the year. The stock trades at 33 times next year’s earnings estimate, which seems like a steal for this top AI chip supplier.
Source: https://www.fool.com/investing/2024/11/27/success-nvidia-blackwell-only-reason-buy-stock