Nvidia (NASDAQ:NVDA) stock has surged over 200% this year, driven by its leadership in generative AI and a near-monopoly in specialized semiconductors. By adding an accelerated quantum computing program, NVDA establishes itself firmly in the realm of transformative technologies.
The company extends its IoT influence with AI technologies, including the Metropolis vision AI platform at Bengaluru Airport. Here are some more reasons you should invest in Nvidia and trust it for long-term gains.
NVDA Stock Beats Expectations
Nvidia exceeded Wall Street’s Q3 earnings expectations, reporting adjusted earnings per share of $4.02 on revenue of $18.12 billion. The results, surpassing analysts’ projections, highlight the ongoing surge in demand for the company’s chips driven by the artificial intelligence boom.
The company’s Q4 revenue guidance surpassed expectations at $20 billion, and shares, despite the positive outlook, declined approximately 3% on Wednesday. CEO Jensen Huang emphasized the industry shift toward accelerated computing and generative AI, with various sectors adopting these advancements.
Despite delivering a positive earnings report, the stock market response remained subdued due to concerns about new restrictions on chip exports to China. Nvidia expects a substantial decline in sales to affected destinations but expects offsetting growth in other regions.
Strong Data Center Business
In Q3, Nvidia achieved a record $14.51 billion in data center sales, marking a 279% YoY surge. The sustainability of this growth is a focal point for analysts. While current demand remains robust, concerns arise if cloud providers struggle to capitalize on generative AI investments.
Bernstein analyst Stacy Rasgon reaffirmed an outperform rating on NVDA stock, raising the price target to 700 from 675. Rasgon noted the ongoing strength in AI demand, and while sustainability remains a question, he expects continued substantial growth.
Nvidia CEO Jensen Huang anticipates data center business growth through at least 2025.
Still Leading in the GPU Industry
Two years ago, Nvidia relied heavily on GPU sales for PC gaming, but now server farm deployments drive most of its revenue. Introducing Microsoft-backed OpenAI’s ChatGPT in 2022 boosted demand for Nvidia’s GPUs. Despite challenges like competition and export restrictions in China, analysts were optimistic ahead of Tuesday’s report.
Raymond James analysts Srini Pajjuri and Jacob Silverman expressed confidence in Nvidia’s GPU demand outpacing supply amid expanding Gen AI adoption.
They expect Nvidia to maintain over 85% share in Gen AI accelerators through 2024. Despite concerns, Nvidia stock has surged 241% this year, outperforming the S&P 500.
On the date of publication, Chris MacDonald 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.
