Founded and established about three decades ago, Nvidia (NASDAQ:NVDA) was among the first semiconductor stocks that specialized in high-end gaming GPUs. In the 2000s, NVDA stock expanded into the AI, semiconductor, and cloud computing space, distinguishing itself from other companies who offer competing chips.
Indeed, fiscal 2023 was a great time to be an investor in NVDA stock. The company reached peak success, with Q3 revenue skyrocketing to $18.1 billion and net income soaring to $9.2 billion. The company focused more on AI and accelerated computing, launching excellent and top sold products like H100 GPU and Grace Hopper H200 AI Superchip. These chip models have significantly contributed to Nvidia’s huge success and performance.
Additionally, Nvidia’s collaboration with Microsoft’s (NASDAQ:MSFT) Azure for cloud-based AI solutions and substantial data center revenue growth solidify its influential position in the tech industry.
These catalysts all position Nvidia well for growth, and the company is clearly in this race for the long-run. If you’re still hesitant about considering NVDA stock at its elevated valuation multiple, here are three additional reasons to consider this chip giant right now.
Everyone’s Buying (Even Those Regulating the Company)
U.S. Rep. Nancy Pelosi, D-California, gained substantial profits from her recent Nvidia investment. Acquiring 50 call options at a strike price of $120 in November 2023, she made almost $500,000 by early 2024, exceeding her annual salary in one well-timed trade. Nvidia’s stock rose over 21% post-acquisition, making plenty of investors (not just regulators and legislators) tons of money.
We’ll leave the ongoing debate around whether politicians should be allowed to trade stocks on the table for now. But I do think that the general effect of having the masses focus so intently on one company in a high-growth area is undoubtedly positive for the company in question. Right now, Nvidia remains the top chip producer companies are focusing on, with the company’s high-performance chips leading the way and generating significant industry partnerships and announcements on a regular basis.
On that note, one of the more intriguing purchase announcements came from Meta Platforms (NASDAQ:META). The company shared its plans to buy over 350,000 H100 GPUs from Nvidia for one of his most ambitious projects yet: developing a human-like AGI. This project will need Nvidia’s chips and are valued at approximately $10.5 billion to put a jumpstart on its AGI plans.
High-Performance Chips Are Seeing a Demand Surge
The RTX 4070 Ti Super reportedly showed stronger launch day sales (280-300 units) compared to the RTX 4070 Super (240 units) at Mindfactory, a major German retailer. Despite mixed reviews, higher-priced model’s increasing VRAM (16GB) might explain the heightened interest. In contrast, AMD’s (NASDAQ:AMD) RX 7600 XT, launched simultaneously, had modest sales, moving around 30 units on its first day in Germany.
Nvidia’s competitors, like AMD, may find the sales results disappointing. But factors like limited availability and models selling above MSRP influenced the situation. These sales figures, from one European retailer for a single day, provide limited insights. The unexpected interest in the RTX 4070 Ti Super over the RTX 4070 Super contrasts with earlier expectations, challenging previous rumors about the latter’s shaky launch. Regional variations in GPU performance may exist, as indicated by differing reports in Europe and the US.
Possible Partnership with OpenAI and Korean Chipmakers
OpenAI CEO Sam Altman was reported to have had back to back meetings with SK and Samsung executives. This has raised rumors and speculations that Nvidia is in the runs of making alliances with the two big companies.
Joining forces could empower Samsung and SK in the competitive next-gen chip landscape, combining OpenAI’s software prowess with extensive hardware capabilities for a leading position in the AI era, as suggested by industry observers.
In light of reports about OpenAI’s quest to manufacture its own AI chips and reduce dependency on Nvidia, CEO Sam Altman’s notable visit to Samsung and SK hynix indicates strategic moves to navigate the AI chip landscape. With soaring demand, Fabless firms like OpenAI are striving to secure Nvidia’s expensive GPUs for accelerating complex AI tasks.
At the time of writing, OpenAI has already acquired 10,000 Nvidia chips, each priced at $25,000 due to limited supply and high demand.
Don’t Hesitate, Buy NVDA Stock Now
Despite initial criticism of Horizon Worlds, Meta Platforms acknowledges the demand for advanced graphics in augmented and virtual reality. Moreover, Bank of America projects Nevada’s cash flow potential to be a whopping $100 billion over the next two years.
Nvida is a dominant player in the AI market, holding a massive amount of control in this space. This will undoubtedly benefit long-term investors, though much of the company’s future success is likely already embedded in its stock price.
That said, if this AI revolution is for real (and the market seems to think it is), NVDA stock will remain the way to play this space over the long-term.
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.