The artificial intelligence (AI) revolution is gaining momentum, and Nvidia (NVDA) is at the forefront of this transformative wave. Despite some doubts about its stock price, there are compelling reasons to consider investing in Nvidia right now.
In this article, we’ll explore three smart reasons to buy Nvidia stock and why it’s poised for continued success.
Business Soaring to New Heights
Nvidia isn’t merely growing; it’s skyrocketing. In the most recent quarter, the company reported a staggering 101% year-over-year increase in revenue, totaling a remarkable $13.5 billion. Simultaneously, the adjusted net income surged by an astonishing 422%, reaching $6.7 billion. These figures are particularly impressive for a company with a market capitalization of $1.1 trillion.
Nvidia’s management is optimistic about the future, with expectations of sales growth accelerating to 170% in the current quarter. CEO Jensen Huang attributes this remarkable growth to powerful technological trends that are driving Nvidia’s expansion.
A Network of Strategic Partnerships
Collaboration is a key pillar of Nvidia’s strategy for success. The company has forged significant partnerships with industry leaders to fuel its growth further.
Recently, Nvidia partnered with Hugging Face to simplify the development and customization of large language models on its Nvidia DGX Cloud supercomputer service. Additionally, a deal with Alphabet’s Google Cloud promises to integrate hardware and software offerings more closely, accelerating innovation.
Furthermore, Nvidia joined forces with Tata Group and Reliance Industries to bring advanced AI capabilities to India’s rapidly growing economy. These partnerships are expected to enhance AI adoption and increase demand for Nvidia’s chips, software, and services.
Attractive Valuation for Investors
Investors often assume that a stock as successful as Nvidia must be overpriced. However, the numbers tell a different story. Nvidia’s shares are currently trading at 42 times projected earnings for fiscal year 2024 and less than 27 times analysts’ estimates for fiscal year 2025.
Considering that the company is projected to increase its profits by a remarkable 222% this year and 55% next year, these valuations appear relatively modest. Notably, Nvidia’s board of directors recently approved a $25 billion share repurchase program, signaling confidence in the company’s future prospects.
Seizing the AI Future with Nvidia
The AI bull market is just getting started, and Nvidia is well-positioned to ride the wave. With outstanding business performance, a network of strategic partnerships, and an attractive valuation for investors, the company remains a compelling choice for those looking to capitalize on the continued growth of AI technology.
While some may doubt Nvidia’s meteoric rise, the evidence suggests that it still has ample room for expansion and is likely to reward investors who buy and hold its stock.
