Nvidia’s Stellar Year: A Deep Dive into Growth Opportunities
Nvidia (NASDAQ: NVDA) has had an exceptional year, marked by achievements and milestones. As a leading artificial intelligence (AI) chip designer, Nvidia has consistently reported record revenues quarter after quarter. Recently, it was welcomed into the esteemed Dow Jones Industrial Average. The company has also noted a significant increase in demand for its latest Blackwell architecture. Remarkably, Nvidia’s stock has surged around 160% in 2023, making it the strongest performer in the Dow.
Nvidia’s Dominance in AI Chip Market
With the ongoing AI boom, Nvidia appears to be a prime stock for investors looking to capitalize on this sector. The company currently controls 80% of the AI chip market and has developed a wide range of related products and services. The AI market, valued at $200 billion today, is projected to exceed $1 trillion by the end of the decade—an opportunity from which Nvidia is well-positioned to benefit.
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Timing Your Investment in Nvidia
As speculation continues about Nvidia’s stock, an important date to keep in mind is January 6, 2025. Investors may wonder if they should purchase shares before this date. Anticipation surrounding Nvidia’s innovations and the demand for its products could influence stock movements.
Image source: Getty Images.
Nvidia’s GPU Evolution
Nvidia’s story began with its graphics processing units (GPUs), initially designed for video games. However, their capacity to handle multiple tasks simultaneously has made them ideal for AI applications. This evolution has led to notable revenue growth, with the latest figures surpassing $35 billion and gross margins exceeding 70%. Nvidia’s return on invested capital (ROIC) reflects the company’s sound investment strategy over recent years.
NVDA Return on Invested Capital (Annual) data by YCharts.
Mark your calendars for January 6, when the Consumer Electronics Show (CES) 2025 kicks off in Las Vegas. Nvidia’s CEO, Jensen Huang, will keynote the event, with a series of meetings scheduled with journalists and analysts following from January 7-10. Here, attendees will discover how Nvidia is shaping the technology of the present and future.
In past CES events, Nvidia has showcased groundbreaking technologies like the Nvidia Shield and the Nvidia Drive platform. Although details about their upcoming presentations are scarce, a recent report from Wccftech indicates Nvidia may reveal innovations centered around “neural rendering” for the consumer-gaming GPU market.
Nvidia’s Role in the Gaming Sector
While Nvidia derives most of its revenue from data centers these days, its gaming sector remains strong. The company’s revenue in this area increased by 15% in the last quarter, reaching $3.3 billion, highlighting its continued growth potential.
During CES, there may be questions regarding the Blackwell launch. Although we may not expect significant news—since Nvidia provided a comprehensive update during its earnings call on November 20—any brief comments from Huang could impact stock performance. As a customizable platform featuring over seven chips and various networking options, demand for Blackwell has been described as “insane,” according to Huang’s recent CNBC interview.
Is Now the Right Time to Invest in Nvidia?
So, should you buy Nvidia shares before January 6? It is quite probable that the stock could rise during or after CES, responding to excitement around new innovations. If Nvidia is on your radar, it may make sense to invest sooner rather than later.
However, long-term investors should remember that short-term price fluctuations won’t significantly affect their returns over extended periods, whether five or ten years. Therefore, if you’re planning on investing in Nvidia, consider that your investment could be sound whether you buy before or after CES, given the company’s strong market position and the promising growth of the AI sector.
Should you invest $1,000 in Nvidia right now?
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If you had invested $1,000 in Nvidia on April 15, 2005, when it was featured, your investment would have grown to $800,876!*
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*Stock Advisor returns as of December 16, 2024
Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
