Nvidia (NASDAQ: NVDA) jumped again on Tuesday, adding to its ongoing winning streak this yr. The stock gained ground since the trading day wore on and by the purpose the market closed, the stock was up 7.2%.
The broader market was decidedly mixed today, seeking direction, nonetheless the catalyst that helped send the chipmaker higher was strong quarterly results by Oracle (NYSE: ORCL). The company cited strong demand for AI-centric cloud services with demand far outstripping supply. Oracle also cited a recent cloud-infrastructure contract with Nvidia and hinted at more to return, saying “We expect to have some very nice joint announcements with Nvidia next week,” at the company’s GPU Technology Conference (GTC), which begins on Monday.
Is Nvidia stock still a buy?
This announcement adds to the growing mountain of evidence that the demand for generative AI is just getting began. Nvidia has nabbed the pole position by supplying the graphics processing units (GPUs) equipped to handle the pains of AI processing. Furthermore, rivals have been unable to give you a greater solution, allowing Nvidia to dominate the sphere — in two ways.
First, Nvidia is the leading provider of the GPUs utilized in data centers, with a dominant 98% of the market, consistent with Wells Fargo analysts. For the rationale that overwhelming majority of AI computing is accomplished inside the cloud and data centers, this benefits Nvidia. Second, the company may be the go-to for processors utilized in machine learning — an earlier branch of AI — controlling a 95% share of that market as well. This provides Nvidia an entrenched position, a transparent advantage over would-be challengers.
In consequence, Nvidia has delivered three consecutive quarters of record-setting growth, highlighted by triple-digit, year-over-year revenue and profit growth, with one other triple-digit quarter on tap.
This leads to the quintessential investing query: Is Nvidia stock a buy. After the company’s recent blockbuster earnings, Nvidia’s valuation dropped significantly, currently trading for 36 times forward earnings. While that could be a premium compared with a price-to-earnings (P/E) ratio of 28 for the S&P 500, Nvidia’s track record of blockbuster growth illustrates that its deserving of a premium.
It seems clear that the demand for AI will proceed, with Nvidia sitting on the toll gate. This, in turn, will profit the company — and investors.
Do you have got to take a position $1,000 in Nvidia immediately?
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Danny Vena has positions in Nvidia. The Motley Idiot has positions in and recommends Nvidia and Oracle. The Motley Idiot has a disclosure policy.
Nvidia Stock Surged (Again) Today. Is It too Late to Buy the Red-Hot Artificial Intelligence (AI) Growth Stock? was originally published by The Motley Idiot