Did you miss out on the magnificent rally in Nvidia (NASDAQ:NVDA) stock? Or maybe you’re worried that a crash could be right around the corner? I understand these concerns, but I invite you to set your fears aside and consider taking at least a small share position in Nvidia.
The main reason to own Nvidia stock in 2024 is to get some portfolio exposure to the market for artificial intelligence (AI) hardware. At this point, it’s more of a necessity than a luxury.
Just consider the potential rewards of investing in Nvidia, versus the opportunity costs of missing out on the next big AI-fueled rally.
An Unexpected Boost for NVDA Stock
There are plenty of reasons for NVDA stock to move higher, but here’s one you probably didn’t expect. A different chipmaker, Taiwan Semiconductor (NYSE:TSM), reportedly anticipates that its revenue growth will be at least 20% this year, or more precisely, in the low- to mid-20s percentage-wise.
That’s double the expected revenue-growth expectation of 10% for the global chip market. Why would this be bullish for Nvidia, though? First of all, if Taiwan Semiconductor anticipates robust demand for microchips in 2024, this should bode well for Nvidia.
Furthermore, Taiwan Semiconductor isn’t necessarily a rival to Nvidia. Remember, Taiwan Semiconductor is a third-party chip manufacturer that produces AI chips for U.S. chipmakers, including Nvidia.
Hence, optimism surrounding Taiwan Semiconductor should, to a certain extent, reflect positively on Nvidia. It’s yet another reason — in case you needed one — to buy Nvidia stock with confidence.
Nvidia Stock Is the ‘Top AI Play’
As NVDA stock rallies and sends the short-sellers into hibernation, experts on Wall Street can’t help but to notice Nvidia’s dominance in the AI-hardware arena. For example, Barclays analysts observed, “With supply constraints, customers are often using the entire NVDA platform in order to get priority shipments of accelerators.”
Meanwhile, Oppenheimer analyst Rick Schafer found that Nvidia leverages a “dominant hardware/software installed base.” Consequently, Schafer identified NVDA stock as his “top AI play.”
Moreover, Nvidia has a sizable order backlog that Schafer estimates will extend for more than six months. With that in mind, Schafer reiterated his “outperform” rating on Nvidia stock along with a $650 price target.
That’s not unreasonable, considering the stock touched $570 not long ago. One catalyst to get NVDA stock to $650 will be Nvidia’s B100 AI chip. Be on the lookout, as Schafer expects Nvidia to launch the B100 chip in 2024’s third quarter.
Don’t Fret About Nvidia Stock Being Too Expensive
If you got hung up about valuations in 2023, you may have left a lot of money on the table with Nvidia stock. Are you going to make the same mistake again in 2024?
The year is still young, and so is Nvidia’s growth story. Like Schafer, you can make NVDA stock your top AI play. Even after last year’s amazing share-price rally, it’s not too get on the bus for a long, profitable ride.
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.
