seems NVIDIA(NASDAQ: NVDA) He is a victim of his own success. After another incredible quarter in which it doubled its earnings per share (EPS) year over year, the chipmaker’s stock sank in the days after releasing its third-quarter numbers. The fact is that expectations could hardly be higher. It’s a good thing the company seems to still be firing on all cylinders.
This is not the first time you have been in this situation and it probably won’t be the last. Nvidia saw its stock retreat nearly 20% in the weeks following its last launch, only to gain nearly 35% from that low. There are good reasons to remain optimistic, as the coming year will be full of important catalysts for the company.
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On Tuesday, December 3, Nvidia joined other leading Artificial Intelligence (AI) companies to discuss the future of the industry with the investment community. The annual USB The Global Technology and Artificial Intelligence Conference presents an opportunity for Nvidia to demonstrate continued leadership and make the case for why it has a long way to go. The event combines the technical with the practical, shedding light on how impactful AI can be in creating real-world value.
While one event is unlikely to move the needle, every opportunity the company (and the industry, for that matter) has has a chance to make its case count. Here are three reasons why Nvidia is a buy as the event gets underway.
Look, this isn’t news, but it’s worth repeating: the AI market is huge, it’s growing rapidly, and there’s every reason to believe this will continue. PwC, one of the “big four” accounting firms, believes AI can add $15.7 trillion to the global economy by 2030. Statista predicts a compound annual growth rate (CAGR) for the total AI market of the 28.3% until 2030.
It is not only analysts and commentators who think this way; CEOs across Silicon Valley reiterated their commitment to AI and, more specifically, to spending billions of dollars on AI infrastructure. In GoalIn the latest earnings call, CEO Mark Zuckerberg stated that despite record capital expenditures, his company “should invest more” because AI will “accelerate [Meta’s] core business” and “should have a strong return on investment in the coming years.”
That’s great news for Nvidia. The company’s chips supply the vast majority of the industry and this market dominance is expected to continue for the foreseeable future. At this point, not even amd can offer a chip that matches the performance of Nvidia’s flagship chips. While this lead is likely to shrink as time goes on, it’s doubtful Nvidia’s will be surpassed. Nvidia has enormous resources (in capital and talent) that it can use to defend its top position.
Blackwell, Nvidia’s new line of Superchips, launches this month and there are already samples in the hands of many of its major customers. The chips are incredibly powerful, more than twice as powerful as current Hopper chips, and demand for them is at a fever pitch. CEO Jensen Huang described the demand as “staggering” and reports indicate the company has been sold out for a full year.
This is a big moment for Nvidia and Wall Street is eager for the company to make a successful launch. If setbacks are expected, Nvidia’s executive team certainly didn’t share them in its third-quarter earnings call. The team painted an optimistic picture for next year and the launch of Blackwell, expecting more Blackwells to ship than previously expected. I think there’s a good chance Blackwell’s earnings will be even higher than Wall Street expects, but we’ll learn a lot more in the coming months.
The term has been thrown around a lot recently, but a big focus of Nvidia’s call, in addition to the Blackwell launch, was the development and adoption of agent AI, essentially AI that can actually donot just create. Jensen Huang likes to think of them as “AI coworkers” who can “help employees do their jobs faster and better.”
I think agent AI, if done right, is where the real value of AI lies. This is where true efficiencies can be achieved in organizations of all types. One of the current questions in the market as a whole is whether AI can deliver value that justifies the enormous costs involved. If you can, this is where we’ll see it.
Nvidia is at the forefront of this trend, offering “an operational agent AI platform,” as Huang puts it, insisting that industry leaders are already using it to build “co-pilots,” an industry term for helpers and AI agents.
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Randi Zuckerberg, former director of market development and spokesperson for Facebook and sister of Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has positions and recommends advanced microdevices, meta platforms and Nvidia. The Motley Fool has a disclosure policy.
3 Reasons to Buy Nvidia Stock as the UBS Global AI and Technology Conference Begins was originally published by The Motley Fool
