Nvidia (NASDAQ: NVDA) continues to set significant benchmarks, recently overtaking Apple as the world’s most valuable company with a market cap of $3.57 trillion. This adds to an impressive year, including surpassing $1,000 per share and being inducted into the Dow Jones Industrial Average. While it has achieved this ranking before, the question remains: will it maintain this position?
Strong demand for Nvidia’s artificial intelligence (AI) chips supports its growth potential. The AI market is projected to rise from $200 billion to $1 trillion over the next decade, and the launch of its new Blackwell architecture is anticipated soon. Despite Nvidia’s stocks rising over 190% this year and a staggering 2,700% over the past five years, market stabilization could give Apple another chance to reclaim the lead.
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Transforming the Landscape of AI
Nvidia has evolved from being known primarily for graphics processing units (GPUs) used in gaming to becoming a key player in AI technology. These powerful chips are perfectly suited for various applications, including critical AI tasks like model training and inference.
The AI surge has allowed Nvidia not only to sell GPUs but also to offer a wide array of products and services tailored to AI development. As a result, Nvidia’s earnings have skyrocketed, with recent quarterly increases reaching triple-digit percentages. Its gross margin has also expanded beyond 70%, indicating substantial profitability.
The broader market has acknowledged Nvidia’s significance, leading to its inclusion in the Dow Jones Industrial Average, where it replaced chipmaker Intel.
The company’s stock has ascended impressively this year, prompting a 10-for-1 stock split aimed at making shares more accessible to a wider audience. This action did not alter the overall market value but made shares appear more affordable. Following this split in early June, Nvidia’s shares surged an additional 20%.
Anticipating Key Events
Looking forward, two critical events are poised to shape Nvidia’s future: the earnings report set for November 20 and the anticipated Blackwell launch. Both developments could influence Nvidia’s standing compared to Apple in terms of market value.
The company’s outlook predicts double-digit revenue growth for the upcoming quarter. Although this is a slower pace than previous triple-digit growth, it is essential to understand the context. Nvidia has achieved rapid revenue increases recently, complicating year-over-year comparisons.
In the same quarter last year, revenue already reached $18 billion. Thus, a slight reduction in growth rate is a natural progression. Investors will closely monitor the earnings call for insights about the Blackwell launch. Nvidia has indicated that production is ramping up, with expectations to generate billions from Blackwell in the same quarter. Demand is reportedly outpacing supply, highlighting the ongoing interest in Nvidia’s AI solutions.
Long-Term Perspective Matters
While focusing on these upcoming events is important, maintaining a long-term perspective is essential. Short-term fluctuations will not significantly alter the overall view of Nvidia’s performance over a longer timeframe. Investors should weigh this before making decisions based on recent news.
Nvidia’s long-term outlook remains promising, securing its position as a market leader, innovating to sustain growth, and demonstrating strong earnings. Whether or not it retains its status as the most valuable company, Nvidia stock appears to be a solid option for long-term investment.
Should You Invest $1,000 in Nvidia Right Now?
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Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple, Intel, and Nvidia. The Motley Fool recommends the following options: short November 2024 $24 calls on Intel. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
