With the AI chip market experiencing a sell off, investors are wondering if they are still a buy. Nvidia stock (NASDAQ:NVDA) holds a dominant position in the market, and has pioneered many of the development of graphics processing units.
While the stock market is facing major uncertainties, investor sentiment has soured on sky high chip stocks. Especially the ones who have issued weak guidance in their latest quarterly financial results. But Nvidia’s outlook in 2024 remains strong, and any potential dips in the short term can provide investors with a great buying opportunity.
Continued Dominance in AI GPUs
Artificial intelligence represents one of the most transformative technological advancements since the dot-com era. At the core of AI development and deployment lies an insatiable demand for powerful computation hardware.
Nvidia excels in this arena, and their GPUs are the gold standard for training and running complex AI models. This is particularly evident for LLMs like ChatGPT and Gemini which require an unprecedented amount of computational power.
Their dominance stems from not just its hardware but also its dedicated software platform, CUDA. CUDA is the preferred software platform for many AI developers, creating a network effect that reinforces Nvidia’s lead. This dominance offers significant potential for revenue growth as AI becomes integral to more industries.
While competition is heating up, Nvidia still holds the lead in the AI GPU market. The company plans to release their next-generation H200 GPUs in the second quarter of 2024.
Chip Demand to Remain Robust
Demand for Nvidia’s advanced AI chips remains exceptionally strong. The explosion of generative AI, LLMs, and other AI applications will continue to be a significant growth driver.
More recently, AMD gave the market their forecasts on the demand for AI chips. They expect the market to grow to nearly $400 billion by 2027. Ultimately, this is bullish news for Nvidia with the planned release of the H200 GPUs and acceleration in data center revenues.
Nvidia Stock: Buy the Dip While You Can
Nvidia stock has taken a breather in the last month, after reporting monster growth in the 2024 fiscal year. Investors have scaled some profits after chip stocks reached overbought territory.
However, the underlying fundamentals have not changed and there are many catalysts to look forward to in 2024. With the planned release of their next-generation H200 GPUs in the second quarter, you’ll have a shot at buying the dip before the next move higher.
On the date of publication, Terel Miles 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.
