Usually, I don’t recommend a stock when a company’s valuation looks inflated. However, today’s investors need to be on the right side of the trade when it comes to Nvidia (NASDAQ:NVDA) stock. As long as you want to participate in the future growth of the artificial intelligence (AI) technology market, you need to own at least a handful of Nvidia shares.
My message to the skeptics is this: Resistance is futile. As we’ll discover, Nvidia is forming value-added partnerships and expanding its international presence. So, bet against Nvidia at your own peril — and by that, I mean don’t bet against Nvidia at all.
Is NVDA Stock Just a ‘Delusion’?
Fast movers in the financial markets will always have their doubters and naysayers. One example is Research Affiliates founder and quantitative-investing expert Rob Arnott, who considers 2023’s gains in NVDA stock to be based on a “big market delusion.”
Furthermore, Arnott served up a backhanded compliment by calling Nvidia a “great company priced beyond perfection.” And I’ll admit, Nvidia’s GAAP-measured trailing-12-month price-to-earnings (P/E) ratio of 110x might bother some investors.
But then, Nvidia’s premium valuation might actually be justified. The demand for AI-compatible hardware in 2023 is undeniable. Furthermore, Nvidia’s second-quarter fiscal 2024 earnings report indicated 101% year-over-year revenue growth and a 429% increase in adjusted EPS.
Additionally, Nvidia is expanding its partnership with another tech titan, thereby solidifying its AI market foothold. That tech titan is none other than Alphabet’s (NASDAQ:GOOG, NASDAQ:GOOGL) Google Cloud, and the two companies revealed “new AI infrastructure and software for customers to build and deploy massive models for generative AI and speed data science workloads.”
This collaboration will immediately benefit researchers, but should soon have implications for generative AI workloads generally. It’s just another example of how Nvidia is the undisputed heavyweight champion of AI hardware. There’s no “big market delusion” here — it’s just the truth, whether the doubters want to accept it or not.
Nvidia’s Essential Partnerships in India
Moreover, here’s another truth that Nvidia’s critics might not want to hear. The company is making strides in a vast and potentially lucrative technology market: India.
On Sept. 8, Nvidia disclosed not just one but two AI-focused partnerships with Indian conglomerates. First, Nvidia will work with Reliance Industries to “build AI infrastructure that is over an order of magnitude more powerful than the fastest supercomputer in India today.”
Second, Nvidia is collaborating with Tata Group to “bring state-of-the-art AI capabilities within reach to thousands of organizations, businesses and AI researchers, and hundreds of startups in India.” Both of these team-ups involve Nvidia’s ultra-powerful GH200 Grace Hopper Superchip.
As a Reuters report put it, these collaborations will enable Nvidia to “deepen inroads to the emerging AI ecosystem of the South Asian nation.” As Nvidia strikes savvy deals in India now, the company’s competitors will surely be forced to play catch-up later on.
Get NVDA Stock Now or Regret It Later
There’s no “big market delusion” here. Sure, Nvidia appears to have a rich valuation, but the company’s rapid growth and its market dominance are inarguable.
In other words, investors can either join the AI movement and hold NVDA stock, or watch from the sidelines and regret it later on. For some of us, this might mean getting past our valuation concerns.
So, quit resisting the AI revolution when you can capitalize on it instead. Now is the time to get on board the Nvidia train, which is leaving the station in 2023.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
