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NVDA Stock Forecast: What Should Investors Expect From Nvidia in 2024?


  • Nvidia (NVDA) stock has been on a roll thus far in 2023.
  • However, differing views on the stock’s future performance are proliferating.
  • The company’s increasingly-close ties to AI continue to drive interest in the stock.
NVDA stock - NVDA Stock Forecast: What Should Investors Expect From Nvidia in 2024?

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Nvidia (NASDAQ:NVDA) continues to be considered the creme-de-le-creme of AI stocks. The company’s business model, focused on supplying high-performance chips powering the AI revolution, makes this stock one of the pure-play options that’s a no-brainer for growth investors right now.

Indeed, while competitors like Microsoft (NASDAQ:MSFT) and other chip makers may challenge Nvidia in this space, the company maintains a substantial lead in servicing the AI sector.

As AI expands its influence across industries in the coming years, Nvidia emerges as the front-runner to gain market share in the short term. Once companies opt for Nvidia, switching becomes challenging, positioning the company well for long-term success and maintaining its premium share price.

U.S Government Protests Against Nvidia Creating Chips for China

US Commerce Secretary Gina Raimondo has directly addressed Nvidia’s strategy of redesigning GPUs to navigate export restrictions, warning that she will promptly exert control over such redesigns. Sanctions since 2022 have posed challenges for chip exports, particularly to China. 

Despite restrictions, Nvidia has sought to bypass export bans by introducing slightly modified models exclusively for the Chinese market.

US Commerce Secretary Gina Raimondo expressed her firm stance against allowing China access to advanced chips. Speaking at the Reagan National Defense Forum, she emphasized the need to deny China cutting-edge technology. Raimondo specifically addressed chip redesigns for AI purposes, asserting immediate control if such modifications occur.

With NVDA stock’s GPUs and Tensor cores excelling in AI tasks, the language surrounding US export restrictions on chips becomes more direct. Nvidia has swiftly redesigned products to navigate sanctions, such as a modified RTX 4090. The focus seems on restraining chip exports to China, a significant market for chipmakers facing challenges amid global restrictions.

New AI Chips with AWS

Amazon Web Services (AWS) has unveiled its AI chips, highlighting cost-effective choices and embracing Nvidia’s latest GPUs for diverse solutions. Addressing Nvidia GPU demand surge post-OpenAI’s ChatGPT, Amazon counters chip shortages with proprietary designs and Nvidia access, bolstering its cloud competition with Microsoft.

At the Reinvent conference, AWS announced access to Nvidia’s H200 AI GPUs, unveiled Trainium2 AI chips for model training, and introduced Graviton4 processors. The H200 promises faster output, attracting demand for chip rentals, while Trainium2 supports chatbots like OpenAI’s ChatGPT. Graviton4 processors, with 30% improved performance and energy efficiency, offer cost-effective cloud solutions amid inflation.

Nvidia Focuses on Japan for its AI Processors

NVDA stock’s CEO Jensen Huang pledged on Monday to prioritize supplying artificial intelligence processors to Japan in response to surging market demand. As Japan works to revitalize its semiconductor industry and advance AI technology, Nvidia’s GPUs hold a dominant position in the AI market. Huang assured that the company would strive to meet Japan’s high demand for GPUs, emphasizing the commitment during a meeting with Prime Minister Fumio Kishida in Tokyo.

Less than two weeks after Japan approved an additional budget allocating around ¥2 trillion ($13.60 billion) for chip investment, Nvidia CEO Huang visited. Some funds are set to support Taiwan Semiconductor Manufacturing Co. and chip foundry venture Rapidus. Huang expressed optimism about Japan’s budding semiconductor industry, anticipating its capability to produce GPUs.

Recently, it was noted that Chinese firms are acquiring US chipmaking equipment for advanced semiconductor production. This suggests that China may eventually achieve self-sufficiency in powerful hardware for intensive AI tasks. The ongoing developments in this dynamic situation are worth monitoring.

Strength Likely Into 2024

Nvidia’s recent performance has not diminished its appealing valuation, with shares trading at a price-earnings ratio of 24 times and a 0.50 PEG ratio. Strong demand for the data center business contributed to outstanding financials, including 206% year-over-year revenue growth and 1,259% year-over-year net income growth in Q3 of fiscal 2024.

NVDA stock continues to lead in AI with its GPU chips, contributing to robust growth across various business segments. The company’s Gaming segment saw an 81% year-over-year increase, and its Professional Visualization segment expanded by more than 100% year-over-year.

Accordingly, I believe investors have the green light to remain bullish on this stock over the long term. Those who have bought and held this stock over a long period have done well. Indeed, I don’t think that dynamic will change.

Will there be some short-term volatility? Most likely. However, Nvidia certainly holds the potential to grow into its valuation over time, making this a stock that’s easy to hold but difficult to try to time a purchase or sale.

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.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.

Article printed from InvestorPlace Media, https://investorplace.com/2023/12/nvda-stock-forecast-what-should-investors-expect-from-nvidia-in-2024/.

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