Looks like Nvidia (NVDA 1.18%) I am a victim of my own success. The company continued its impressive quarter, doubling its earnings per share (EPS) year-over-year, but its stock price fell within days of releasing its third-quarter numbers. In fact, the expectations couldn’t be higher. It’s good that the company still seems to be firing on all cylinders.
This isn’t the first time I’ve found myself in a situation like this, and it probably won’t be the last. Nvidia has seen its stock drop nearly 20% in the weeks since its last release, but has risen nearly 35% from that low. There are plenty of big catalysts for the company next year, so there’s plenty of reason to be optimistic.
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 UBS Global Technology and AI Conference provides an opportunity for Nvidia to demonstrate continued leadership and make the case for why we need to go further. This event brings together the technical and the practical, revealing just how impactful AI can be in creating real-world value.
While it’s unlikely that any single event will make a huge difference, every opportunity is an opportunity for companies, and by extension, the industry, to make this case count. As the event begins, here are three reasons why Nvidia is a buy.
1. Nvidia hardware continues to dominate
This is hardly news, but it’s worth repeating. The AI market is huge and growing rapidly, and there is good reason to believe it will continue to do so. PwC, one of the “Big Four” accounting firms, believes that AI could add $15.7 trillion to the global economy by 2030. Statista predicts that the overall AI market will have a compound annual growth rate (CAGR) of 28.3% through 2030.
It’s not just analysts and celebrities who think so. CEOs across Silicon Valley have reiterated their commitment to AI and, by extension, to spending billions of dollars on AI infrastructure. In Meta’s last earnings call, CEO Mark Zuckerberg said that despite record capital spending, AI “accelerates (Meta’s) core business” and that ” He said the company should “invest more” as it should “receive a high ROI over the next few years.”
This is great news for Nvidia. The company’s chips supply a large portion of the industry, and this market dominance is expected to continue for some time. At this point, even AMD can’t offer chips that can match the performance of Nvidia’s flagship chips. This lead is likely to narrow over time, but it’s doubtful that Nvidia will be able to jump all at once. Nvidia has vast resources of capital and talent that it can leverage to defend its pole position.
2. Blackwell is here
The latest addition to Nvidia’s superchip, Blackwell, was released this month, and samples are already in the hands of a number of major customers. This chip is incredibly powerful, more than twice as powerful as the current Hopper chip, and its demand is at its peak. CEO Jensen Huang said demand has been “tremendous,” and the company reportedly sold out in a year.
This is a big moment for Nvidia, and Wall Street is eager to see the company pull off the launch. If a problem was expected, Nvidia’s management definitely didn’t share it on its third-quarter earnings call. The team painted a rosy picture about next year and Blackwell’s development, predicting more Blackwells would be shipped than previously expected. I think there’s a good chance earnings from Blackwell will be even bigger than Wall Street expected, but we’ll know more in the coming months.
3. Agent AI is the next big thing
The term has been thrown around a lot lately, but aside from the Blackwell launch, a big focus of Nvidia’s call is on the development and adoption of agent AI (essentially AI that can actually run rather than just create). did. Jensen Huang likes to think of them as “AI colleagues” who can “help employees do their jobs faster and better.”
If agent AI works well, I think that’s where the real value of AI lies. This is where true efficiency can be achieved across all types of organizations. One of the ongoing questions across the market is whether AI can provide value for the enormous costs. If it’s possible, I’ll check here.
Nvidia is ahead of this trend, offering what Huang calls an “operating platform for agent AI,” and industry leaders are already using it to build “copilots” (an industry term for AI helpers and agents). claims to be building.
Randi Zuckerberg is a former head of market development and spokesperson at Facebook, sister of Meta Platforms CEO Mark Zuckerberg, and a member of the Motley Fool’s board of directors. Johnny Rice has no position in any stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Meta Platforms, and Nvidia. The Motley Fool has a disclosure policy.
