Nvidia (NASDAQ:NVDA) Shares have soared over the past five years as the company solidified its dominance in the high-growth artificial intelligence (AI) chip market. The tech giant commands around 80% of that market thanks to the power of its graphics processing units (GPUs). GPUs can process multiple tasks simultaneously, making them ideal for critical AI tasks like training models.
Sales of chips and other AI products and services have helped Nvidia’s data center revenue grow to record triple-digit levels. In the most recent quarter, revenue from the business exceeded $26 billion. That’s a huge amount considering the company’s total revenue as of fiscal year 2023 was $27 billion.
But after such earnings and share price performance, you may be wondering whether it’s too late to get into this AI player, and whether the best opportunity to profit has passed . It is impossible to predict with 100% accuracy whether Nvidia will repeat its past performance. However, the drivers of revenue growth are not only still there, they are growing. As earnings soar, stock prices are likely to rise as well. Check out the $4 billion reason to buy Nvidia today. Each of these reasons will likely drive significant growth in Nvidia’s revenue going forward.
1. Expanding Nvidia’s strength in networking
Nvidia has typically favored its InfiniBand platform for networking, or transmitting data between different devices. However, Ethernet networking remains widely used due to its compatibility between device types. Nvidia is no exception, launching its Spectrum-X Ethernet platform last year. This will allow the company to continue to grow InfiniBand and establish itself in the Ethernet market.
In the most recent quarter, Nvidia’s Ethernet for AI revenue doubled from the previous quarter as “hundreds of customers” signed on to the company’s Ethernet products. In fact, Spectrum-X is on track to become a multi-billion dollar product in just one year of commercialization. The company also aims to release new Spectrum-X products every year, so there’s reason to be optimistic about future growth.
2. Nvidia is leading the way in sovereign AI.
Sovereign AI refers to a country’s ability to generate AI through its own infrastructure and resources. This is particularly valuable because it means that a nation can preserve and exploit its strengths, such as its culture, traditions, and language.
Nvidia’s new segment had zero revenue last year, but it’s already starting to generate low-double-digit revenue this year. Examples of Nvidia’s work in this area include projects with Japan and Italy to build supercomputers, and with a French company to build Europe’s largest supercomputer.
Nvidia spoke about the importance of sovereign AI at the beginning of this movement. It is clear that this opportunity has the potential to be highly profitable as countries launch projects and seek support from Nvidia.
3. Nvidia is a leading company in self-driving car development
Comments from Tesla CEO Elon Musk as Nvidia announced the new Blackwell architecture and upcoming release of chips demonstrate the importance of chip designers in the industry. “There’s nothing better than Nvidia hardware for AI right now,” Musk said. In addition, Oracle co-founder Larry Ellison recently said in a meeting with CEO Jensen Huang that he and Musk begged Nvidia for more chips. said that demand for its GPUs exceeds supply.
The automotive industry was a big growth driver for Nvidia in recent quarters, as all developers of self-driving technology use Nvidia products. The company predicts the industry will bring in “billions of dollars” in revenue, and that this revenue will only increase as next-generation vehicles require more computing.
4. With help from Nvidia, AI could transform healthcare
While AI has the potential to revolutionize many fields, Nvidia’s Huang predicts the technology will have the biggest impact on the medical field. At the company’s GTC conference earlier this year, Huang emphasized that NVIDIA is already present in a variety of specialties, from imaging to gene sequencing to robotics.
At the conference, Huang announced the launch of approximately 24 new services across the fields of imaging, speech recognition, and drug discovery. And in a recent earnings call, NVIDIA said healthcare is “becoming” a multibillion-dollar business for the company.
All of these factors indicate that Nvidia’s revenue growth is further afield. And each of these areas represents a long-term opportunity, meaning we’re not just talking about one or two quarters of revenue growth, but the potential for sustained growth over the long term. . That’s why these are 4 great billion-dollar reasons to buy Nvidia stock today.
Should you invest $1,000 in Nvidia right now?
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Adria Cimino has held positions at Oracle and Tesla. The Motley Fool has positions in and recommends Nvidia, Oracle, and Tesla. 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.