It seems Nvidia (NASDAQ: NVDA) is a victim of its own success. After another incredible quarter in which it doubled its earnings per share (EPS) year over year, the chipmaker’s stock fell in the days following the release of its Q3 numbers. The fact is that expectations could hardly be higher. It’s a good thing the company still seems to be firing on all cylinders.
This is not the first time this situation has arisen, and it probably won’t be the last. Nvidia saw its shares drop nearly 20% in the weeks following its last release, only to rise nearly 35% from that low. There’s good reason to remain optimistic as the year ahead is full of major catalysts for the company.
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On Tuesday, December 3, Nvidia joined other leading companies Artificial Intelligence (AI) companies to discuss the future of the sector with the investment community. The annual one UBS The Global Technology and AI Conference offers Nvidia an opportunity to demonstrate continued leadership and argue why it has so much further to go. The event combines the technical with the practical and sheds light on how impactful AI can be in creating real value.
Although it is unlikely that one event will be decisive, the company – and the industry for that matter – has every chance to make its case. Here are three reasons why Nvidia is a buy as the event gets underway.
Look, this is hardly news, but it’s worth repeating: the AI market is huge and growing rapidly, and there are plenty of reasons to believe it will stay that way. PwC – one of the ‘big four’ accounting firms – believes AI could add $15.7 trillion to the global economy by 2030. Statista predicts a compound annual growth rate (CAGR) for the overall AI market of 28.3% through 2030.
It’s not just the analysts and talking heads who think that; CEOs from across Silicon Valley reiterated their commitment to AI and, more specifically, to spending billions of dollars on AI infrastructure. In Meta‘s last revenue callingCEO Mark Zuckerberg stated that despite record investments, his company should “invest more” because AI will “accelerate the speed.” [Meta’s] core business” and “should have a strong ROI in the coming years.
That’s great news for Nvidia. The company’s chips power the vast majority of the industry, and this market dominance is expected to continue for the foreseeable future. Not even at this moment AMD can offer a chip that rivals the performance of Nvidia’s flagship chips. While this lead will likely diminish as time goes on, it’s doubtful Nvidia’s will make a leap forward. Nvidia has enormous resources – in capital and talent – that it can use to defend its pole position.