Nvidia: The Last Train to Wealth Town Leaving Soon, Don't Get Left Behind

Nvidia is a semiconductor leading company with double pace growth. Most of the analysts are bullish on Nvidia stock price & agree that Nvidia would be one of the outperforming stocks in the upcoming time.

There are three reasons why Nvidia stock can still give you good ROI.

1. Reliable operating performance

Founded in 1993, Nvidia pioneered the graphics processing unit (GPU) for the video game industry. With parallel processing capabilities, GPUs found applications beyond graphics, notably in generative AI for training large language models (LLMs). Nvidia's strategic focus on video game hardware gave it a head start, leading to a transformative shift in its revenue streams.

?In the third quarter, Nvidia's revenue soared by 206% YoY to $18.12 billion, primarily driven by AI-capable GPUs for data centers. The data center segment now constitutes 80% of sales, surpassing the gaming segment at 16%. Nvidia's flagship H100, priced at $30,000, reflects the premium nature of AI chips, promising better margins amid high demand and limited supply.

2. The big AI market for competition

Nvidia faces heightened competition as Advanced Micro Devices (AMD) intensifies production of its M1300x chip family, aiming to challenge Nvidia's H100 in AI model training and inference. While AMD's chips are catching up in performance, they are delayed in reaching the market, allowing Nvidia to maintain its economic advantage.

As AMD's M1300x becomes more widely available, Nvidia has the chance to release even more advanced chips, securing its leading position. With the AI chip market projected to reach $400 billion by 2027, both companies have ample room to capitalize on this lucrative opportunity, ensuring a shared presence in the evolving landscape.

3. Reasonable valuation of Nvidia

Following its impressive surge in 2023, Nvidia's stock appears expensive at first glance. The price-to-sales (P/S) ratio stands at 26, a figure ten times higher than the S&P 500 average of 2.6. However, this metric doesn't consider Nvidia's rapid growth rate or remarkable profit margins.