Nvidia‘S (NASDAQ: NVDA) stocks are on fire – but this is not a short-term phenomenon. The chip designer’s stock has been rising for a few years. It started in 2020 and since then it has increased by more than 1,600%.
Investors have piled into the stock on optimism about the company’s position in artificial intelligence (AI), a market expected to grow by double digits to more than $1 trillion by the end of the decade. Today, Nvidia is the world’s AI chip leader, with a market share of more than 80%. But that’s not the only reason why investors are excited about the stock. One favorable trend explains why Nvidia stock is unstoppable.
The data center business
First, it’s important to note that Nvidia’s data center business includes all of the revenue it generates through its AI products and services. Rivals Advanced micro devices And Intel also have data center companies and have ramped up their offerings to compete with Nvidia.
Here’s the favorable trend that has boosted the company’s stock. As shown in the chart below, Nvidia’s data center revenues have been rising (and rose even higher early last year), while rivals’ data center revenues have lagged. Intel’s data center revenue is actually down from previous levels.
Investors appreciate this growth trend because it gives them confidence that Nvidia remains one step ahead of its rivals. The idea that the company has what it takes to keep the upward sales trend going will keep the positive momentum of the stock prices going. The tech giant has vowed to continue innovating to make that happen, and is ready for what may be its biggest launch yet: the release later this year of its Blackwell architecture and most powerful chip ever.
In addition to Nvidia’s AI chips, the company sells entire platforms to help customers launch their AI programs, so the revenue opportunities are wide. All of this means that Nvidia’s explosive growth is far from over, and could mean significant gains for the stock in the long term.
Should You Invest $1,000 in Nvidia Now?
Consider the following before buying shares in Nvidia:
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Adria Cimino has no positions in the stocks mentioned. The Motley Fool holds positions in and recommends Advanced Micro Devices and Nvidia. The Motley Fool recommends Intel and recommends the following options: long January 2025 $45 relying on Intel and short May 2024 $47 relying on Intel. The Motley Fool has a disclosure policy.
1 Favorable Trend Explains the 1,600% Surge in Nvidia’s Share Price Originally Published by The Motley Fool
