Nvidia: Accelerating Profits
Embracing the winds of change, Nvidia (NASDAQ: NVDA) finds itself in a gold rush with AI at its helm. As data centers pivot towards accelerated computing for AI training, Nvidia stands as the beacon that guides them. In a recent quarter, its revenue surged over 100% YoY, fueled by the skyrocketing demand for its GPUs needed in AI model training.
Anticipating even greater growth on the horizon, Nvidia is gearing up to launch its revolutionary Blackwell computing platform, setting a new benchmark for processing power. With upcoming AI models demanding 10 to 20 times more computational heft, Nvidia is poised to equip the $1 trillion worth of data centers set to tackle this mammoth task.
Little-known to many, Nvidia has been paying dividends steadily for over a decade. Surging forward, the company increased its quarterly dividend by a staggering 150% this year, showcasing its meteoric rise in profitability.
Amassing a jaw-dropping $46 billion in trailing-12-month free cash flow, Nvidia’s bright prospects and profitability herald significant dividend hikes in the next decade, atop its promising stock price escalation.
Dell Technologies: The AI Server Maestro
Amidst a recent dip in share prices, Dell Technologies (NYSE: DELL) emerges as a hidden gem, offering an above-average yield amidst a forecasted PC market revival and AI server demand surge.
Dell primarily thrives on client solutions, including PC sales, and infrastructure solutions, which encompass its burgeoning AI server business. While the PC market navigated rough waters due to macroeconomic challenges this year, Dell anticipates a potential revival as Microsoft’s Windows 10 sunsets, compelling users to upgrade.
Yet, the real treasure trove lies in Dell’s prowess in the AI server realm, expected to burgeon tenfold in the next decade. Melding cutting-edge server tech with top-notch services positions Dell as a frontrunner in the league. The company witnessed a robust 38% YoY growth in its infrastructure solutions group in the last quarter.
Analysts foresee Dell’s earnings growing by 12% annually over the next few years, paving the way for augmented dividends. With a 20% increase in its quarterly dividend earlier this year, Dell’s current payout of $0.445 offers a forward yield of 1.68%, outstripping the S&P 500 average of 1.32%. The alluring yield, coupled with a modest P/E ratio of 13, indicates Dell’s stock is undervalued – a ripe opportunity before the server market’s surge.
Meta Platforms: Meta’s AI Symphony
Holding the reins of Facebook and Instagram, Meta Platforms (NASDAQ: META) reaps rich dividends from a thriving digital advertising realm power-boosted by AI. Marking a major milestone, Meta kickstarted its inaugural quarterly dividend in Q1, echoing its robust long-term trajectory and management’s unwavering faith in the AI investments’ dividends.
As the AI infrastructure investment debate gains traction, Meta stands tall as a resounding success story. Seamlessly integrating AI into Facebook and Instagram, Meta enhances content recommendations and fortifies user experience, fueling heightened ad spending and revenue upswing.
Reporting an impressive 22% YoY revenue uptick in Q2 – double the growth rate from a year prior – Meta shines as an AI juggernaut with the rollout of its Llama generation, a colossal leap in large language models. Achieving this feat while doling out quarterly dividends underscores a prosperous journey ahead for Meta in the AI epoch.
With a current quarterly dividend of $0.50 per share, yielding 0.4%, investors can anticipate double-digit growth translating to commensurate rises in dividends in the coming years. Analysts foresee an 18% annual earnings hike in Meta’s future, framing a promising picture alongside an average forward P/E of 23 – promising investors prime returns intertwined with a burgeoning dividend.
The Enduring Appeal of Nvidia
Before diving into Nvidia stock, pause to ponder:
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Randi Zuckerberg, the former director of market development and spokesperson for Facebook and sibling to Meta Platforms CEO Mark Zuckerberg, is a part of The Motley Fool’s board of directors. John Ballard holds positions in Meta Platforms and Nvidia. The Motley Fool boasts positions in and recommends Meta Platforms, Microsoft, and Nvidia. The Motley Fool stands by Intel and advises long January 2026 $395 calls on Microsoft, short January 2026 $405 calls on Microsoft, and short November 2024 $24 calls on Intel. The Motley Fool operates under a disclosure policy.
The opinions expressed are the author’s and may not align with those of Nasdaq, Inc.
