Chip giant Nvidia (NVDA +2.71%) dominates the market and has a big lead on its competitors. While you may hear stories about tech companies diversifying and going to other suppliers and even working on making their own chips, Nvidia’s business still looks robust. It is, after all, hard to argue with its stellar growth rate.
Plus, one of the reasons it continues to make for a good investment is that the business is always working on making even better, more efficient chips that can help its customers. There’s one particularly intriguing opportunity that can be its next big growth catalyst, and that’s making chips that can help chatbots become much more efficient.
Image source: Getty Images.
New platform will help with processing queries
In recent years, companies have invested heavily in artificial intelligence (AI) chips to build advanced models and chatbots. Now, the time has come to prove that those investments have been worth it and can start producing solid results. And it’s those concerns that have weighed on AI stocks this year; the Roundhill Magnificent Seven ETF has declined by around 8%.
Nvidia, however, plans to help with that as it has been working on a new chip and platform that is designed specifically to help with “inference,” which is where AI models put their training to use and answer queries and make predictions. Paying for Nvidia’s existing GPUs can be expensive and unsustainable for companies, and that has prompted many to consider alternatives. But according to a report from the Wall Street Journal, Nvidia may unveil a chip that’s focused on inference that can be more efficient and cost-effective for its consumers, as early as this month.
Today’s Change
(2.71%) $4.82
Current Price
$182.64
Key Data Points
Market Cap
$4.4T
Day’s Range
$175.57 – $182.91
52wk Range
$86.62 – $212.19
Volume
48K
Avg Vol
177M
Gross Margin
71.07%
Dividend Yield
0.02%
Is Nvidia a no-brainer growth stock to buy?
Entering trading this week, shares of Nvidia have declined by 5% since the beginning of the year. Investors are clearly hesitant about whether to invest in the company amid concerns about heightened AI spending and if a possible slowdown may be coming for not just the tech sector but the overall economy.
This is, however, still a solid business to invest in as Nvidia’s revenue soared 65% in its most recent fiscal year (which ended on Jan. 25) and its profits totaled more than $120 billion. Nvidia has been a growth beast, and its constant pursuit of innovation makes it a compelling buy today. While the stock may seem expensive, trading at 36 times its trailing earnings, its forward price-to-earnings multiple, which is based on analyst estimates, is far more modest at 22.
Although the market looks to be a bit shaky of late, buying Nvidia stock can be an excellent move today. Its growth prospects still look great, and this can be a solid growth stock to build your portfolio around for the long term.