Key Points
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Nvidia is a key player in the AI space, as it designs chips powering core AI tasks.
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This has translated into explosive earnings growth.
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Nvidia (NASDAQ: NVDA) has been a clear winner for investors over the past few years, delivering both earnings and stock performance. This is thanks to the company’s wise shift several years ago into what has become a potentially game-changing industry: artificial intelligence (AI).
The tech giant is the world’s top designer of graphics processing units (GPUs), the powerful chips driving the development and use of AI. Nvidia’s are the fastest around, and though their price tag is higher than rivals’, their efficiency may lead to significant cost savings over time.
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All of this has fueled record earnings over the past few years, with revenue reaching a new high of $215 billion in the latest full year. The stock price has followed, rising more than 600% over three years. But with the AI boom in its early stages, there still may be a lot to gain by owning Nvidia stock.
The question now is when to buy this market leader. Should you buy Nvidia before a potential catalyst on March 16? Let’s find out.
Image source: Getty Images.
Nvidia’s shift to AI
So, first, let’s take a more in-depth look at this AI powerhouse. Several years ago, Nvidia’s biggest GPU customer was the video gaming industry, but when the company saw the potential of AI, it shifted gears and worked to serve this new market. Today, Nvidia still is a leader in the gaming market, but importantly, it’s also built an AI empire — and this is now its main business, generating 91% of revenue.
Nvidia’s success is due to a few factors: First, it got in on AI early, establishing its reputation and building relationships with customers, and second, its focus on innovation has kept it ahead of rivals. Nvidia has also expanded its offerings to include not only GPUs but also a variety of related products to fully serve its customers’ AI needs.
The company has been central to the AI revolution so far, and this will likely continue into the next stages of AI growth, as this technology is applied to daily life and fuels developments in areas such as robotics and autonomous vehicles. This is because GPUs aren’t just needed in the training phases, but also to power the “thinking” of AI models as they solve problems in the real world. All of this suggests Nvidia’s earnings should go on to climb well into the future, making it a fantastic AI stock to buy and hold.
Words from Jensen Huang
Now, let’s consider what’s happening on March 16. Nvidia chief executive officer Jensen Huang will keynote the company’s annual GTC AI conference. And in the past, Huang’s presentation has been chock-full of news, from new product introductions to updates on various programs and clues about what’s next for Nvidia in AI. For example, last year, Huang outli