Tech

NVIDIA’s Stock Is a Solid Buy Following Bubble Fears Dispelling

Published

2 weeks ago

April 20, 2024

AlishbaW

Sundry Photography

(CTN News) – Following a successful year in 2023, NVIDIA Corporation’s NVDA shares are off to a good start in 2019.

It was the largest one-day gain in the history of Wall Street for the leading manufacturer of graphics processing units (GPUs) on February 22, based on a frenzy surrounding artificial intelligence (AI).

NVIDIA’s shares have increased by 70.8% this year, surpassing the Semiconductor – General industry’s gain of 48.5%. The company has outperformed other magnificent seven stocks and is now the third largest in the country, behind Microsoft Corporation MSFT and Apple Inc. ASPH.

Skeptics believe that NVIDIA’s stock is in a bubble as a result of its stellar surge. It is important to note that stretched valuations and any potential decline in AI-related demand for NVIDIA’s chips could result in a significant decline in the stock price.

However, NVIDIA does not appear to be in a bubble.

It is not speculation that is contributing to the company’s share price growth, but rather strong fundamentals.

Across multiple industries, AI models have become a major driving force behind productivity gains, resulting in an unquenchable demand.

Although Meta Platforms, Inc. said that the use of AI tools has increased profits from its ad campaigns over the next three years, UBS Group AG anticipates that AI will contribute to productivity gains.

Currently, NVIDIA chips are required for AI models being deployed across a variety of industries, such as manufacturing and cloud computing. It is for this reason that H100 graphic cards are among the most sought-after commodities in the AI chip market. Due to this massive demand, NVIDIA’s revenues and earnings have justifiedably increased.

For the fiscal fourth quarter of 2015, NVIDIA reported revenues of $22.1 billion, an increase of 265% over the same period in 2014.

Earnings per share for the quarter ended January 28, 2024 were $4.93, an increase of 765% over the previous quarter. As a result, the company’s data center business, which manufactures H100 graphics cards, was able to dismiss the adverse effects of government restrictions on the export of AI semiconductors to China.

As a matter of fact, NVIDIA is expected to introduce the B200 Blackwell graphics card soon. In collaboration with Taiwan Semiconductor Manufacturing, will manufacture the powerful AI graphics card that has been funded by the United States government.

Therefore, NVIDIA is optimistic about its future growth and expects to achieve revenues of $24 billion in the current quarter. This is easily above expectations.