Can NVIDIA Continue Its Meteoric Ascent?

NVIDIA (NASDAQ: NVDA) is the talk of Wall Street for good reason. The company’s stock is currently priced at $159 per share, up from $46 last summer. Plenty of people are adamant this incredible run can continue, but others are taking profits off the table and heading to the sidelines, assuming the stock will cool off at some point in the near future.

But is this company’s stock worth your dime? Read on to find out.

NVIDIA Background

NVIDIA is a visual computing company that makes processors for computers with a focus on mobile gaming, autonomous automobiles, virtual reality and data centers. The company was founded in 1993, yet its stock wasn’t on the radar of most investors until 2016.

The stock has tripled in the past year thanks to the success of its low-end GPUs, increased Tegra CPU sales within the automotive market, and the breakthrough of its data center and gaming GPUs.
Investors have fallen in love with NVIDIA primarily because its chips are incredibly powerful and fast compared to those provided by the competition. Indeed, it seems like the company is mentioned in just about every other article covering virtual reality, graphics processors, artificial intelligence, autonomous vehicles and the future of tech in general.

This company seems to have its hands in all computing pies, especially those that have the potential to explode in popularity in the years to come. The company’s incredibly powerful computing chips are in-demand across the hottest tech industries.

Where Will NVIDIA go from Here?

NVIDIA still has a “Buy” rating from more than 10 analysts even though it is trading at over 40 times its forward earnings. The question is whether NVIDIA investors will take profits off the table by selling their shares, or if the stock still has the potential to climb from its current price.

There is a strong argument to be made that NVIDIA has considerable room to grow thanks to the emergence of autonomous vehicles, virtual reality and artificial intelligence.

NVIDIA has a fantastic opportunity to rake in the profits in the driverless car sphere. This segment is currently in its infancy, yet NVIDIA is already on its second generation of driverless vehicle supercomputers that process images for autonomous vehicles to provide them with contextual awareness.

If you are bullish on computer-driven automobiles, you should be bullish on NVIDIA. The company’s supercomputer is referred to as “Drive PX 2”. It is currently used by over 200 automakers and autonomous vehicle researchers. This level of use is a 50 percent increase in the past quarter alone. The driverless vehicle market will approach the $80 billion mark by 2035. This means NVIDIA is in the cat bird’s seat as long as its technology doesn’t significantly falter in the coming years. At the moment, NVIDIA earns 7 percent of its revenue from automobile technology.

NVIDIA’s Role in Artificial Intelligence

NVIDIA GPUs also power artificial intelligence data centers. NVIDIA partners include Alphabet, Microsoft, Facebook and Amazon.com. These tech powerhouses work in tandem with NVIDIA to build artificial intelligence systems. Some estimate NVIDIA’s artificial intelligence market is approaching the $10 billion mark.

If you agree with Silicon Valley tech aficionados that artificial intelligence is emerging as the most important force in all of technology, NVIDIA is a must-buy. NVIDIA GPUs for artificial intelligence have proven so successful that they have spurred a tripling of the company’s data center revue in the last financial quarter.

NVIDIA is a Power Player in Virtual Reality

NVIDIA is also a trailblazer in the virtual reality sphere. Virtual reality is quickly spilling into the mainstream. Though VR has not supplanted traditional video game consoles in homes, this technology is being used for an array of purposes. Virtual reality headsets are being added to fitness centers, schools, hospitals and businesses across the world. The technology helps medical students practice surgeries, provides pain relief for ailing patients and allows customers to tour homes as well as virtual portrayals of remodeled living spaces.

NVIDIA’s GPUs process image data with remarkable speed. Its VR-ready processors are now available for laptops and desktops. The company even has a tool suite targeted to those who develop VR applications with NVIDIA processors. The VR market will eclipse $34 billion by 2022. NVIDIA is poised to grow alongside this emerging technology.

Do not let NVIDIA’s rapid upswing dissuade you from investing. The company’s chips are superior to AMD’s and other competitors’ in terms of the all-important power efficiency capability. NVIDIA is perfectly positioned to benefit from tech advances in VR, autonomous driving and artificial intelligence. These are the tech hotbeds that will be ubiquitous in the years to come. Buy NVIDIA and hold it for the long haul.

Regards,

Ethan Warrick
Editor
Wealth Authority


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