While Nvidia (NASDAQ:NVDA) may not fit the traditional mold of a retirement stock with its ultra-low dividend yield of 0.03%, its dominance in semiconductor manufacturing for generative artificial intelligence positions it as a lucrative long-term investment, with a surge in demand for generative AI technology, NVDA stock has seen significant stock growth, up over 220% this year.
Now within spitting distance of its all-time high (once again), the question is whether the stock has what it takes to continue to dominate in 2024. Let’s dive into whether this stock is a buy at current levels.
Nvidia and Hopper
Nvidia has enhanced its AI computing platform with the new NVIDIA HGX™ H200, featuring the Hopper architecture and the first GPU with HBM3e, offering faster and larger memory for generative AI and HPC workloads. The H200 provides 141GB of memory at 4.8 terabytes per second.
H200-driven systems from top server manufacturers and cloud providers will start shipping in Q2 2024. NVIDIA’s VP, Ian Buck, highlighted the H200’s role in accelerating AI and HPC applications, which address numerous critical global challenges.
Nvidia’s Hopper architecture marked a significant performance boost, especially with H100 and recent software updates like TensorRT-LLM. The subsequent release of H200 promises further enhancements, nearly doubling inference speed on Llama 2 and anticipating ongoing improvements through future software updates.
Robust software tools back Nvidia’s accelerated computing platform, empowering developers and enterprises to build and accelerate production-ready applications spanning AI to HPC efficiently. The Nvidia AI Enterprise suite notably supports various workloads, including speech, recommender systems, and hyperscale inference.
Positioned for Web3
Nvidia emerges as a significant player in the Web3 landscape, with strategic investments in cutting-edge fields like machine learning and artificial intelligence, particularly in “deep learning.” This involves automating speech and object recognition processes, translation software, and other innovative technologies, positioning Nvidia at the forefront of Web3 advancements.
The company envisions a future where automation takes on tasks traditionally handled by humans, potentially reshaping industries and reducing reliance on third-party intermediaries.
Additionally, it maintains a steadfast commitment to evolution, positioning itself as an innovative force in the dynamic tech landscape. For investors eyeing the future of Web3, Nvidia stands as an appealing contender on the frontier of technological advancement.
Positive Outlook for the Future
NVDA stock is set to release Q3 fiscal 2024 results on November 21, with expected revenues of $16 billion. Analysts estimate $16.12 billion, reflecting a 171.7% year-over-year surge. The Datacenter segment’s robust performance is anticipated, driven by increased adoption of cloud-based solutions amidst the prevailing hybrid work environment. A surge in Hyperscale demand and greater inference market adoption are poised to contribute positively to the quarter.
The data center business is expected to profit from increased demand for generative AI and large language models utilizing NVIDIA Hopper and Ampere architectures. Strong chip demand from major cloud and internet companies likely contributed to a robust 226.2% year-over-year growth, reaching an estimated $12.5 billion in Q3 revenue.
Additionally, NVIDIA’s overall Q3 performance is likely boosted by recoveries in its Gaming and Professional Visualization segments, with Gaming showing signs of improvement in the last two quarters due to normalized inventory levels and strong global demand for gaming products.
Overall, investors appear to be betting that Nvidia’s upcoming earnings report will be rock-solid, and propel this stock higher. Based on its previous results, that’s understandable. That said, at this current valuation, cautious investors may want to wait until after the report to consider adding exposure. The stock could move in a big way in either direction. I’m not so sure which direction that is right now.
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.
Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.
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