When Nvidia (NVDA) gained 8.5% in the week after posting quarterly results, it closed at close to a $2 trillion valuation. This widens its market capitalization by $200 billion compared to Alphabet (GOOG). Skittish media reporters compare Nvidia’s size to that of large countries, implying an overvaluation. They do not know what fundamentals will push NVDA stock higher.
Nvidia has an upward trend, supported by positive buying momentum. Artificial intelligence is the game-changer that drove companies like Microsoft (MSFT), through its ChatGPT investment, Tesla (TSLA), and Meta Platforms (META) to buy Nvidia GPU chips. They need GPU-based servers to train their AI model.
Chinese technology firms bought Nvidia hardware two in the last year. If the country appeases the U.S., the U.S. government may back down on some of its trade restrictions.
Nvidia is also investing in its business to widen its leadership position. It will not let competitors like ARM Holdings (ARM), AMD, or Intel (INTC) take its market share in the AI sector.
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Investors unwilling to buy NVDA stock at these prices may consider Broadcom (AVGO). Led by CEO Hock Tan, Broadcom expects AI chips will contribute to 25% in chip growth in 2025.
Nvidia is the leading supplier in AI hyper-growth. This trend will continue as companies evaluate AI technology and apply it to their business to achieve higher operating efficiency in their operations.
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