It seems Nvidia(NASDAQ: NVDA) is a victim of its own success. After another incredible quarter in which it doubled its earnings per share year over year, the chipmaker’s stock fell in the days following the release of its Q3 numbers. The fact is that expectations could hardly be higher. It’s a good thing the company still seems to be firing on all cylinders.
This is not the first time this situation has arisen, and it probably won’t be the last. Nvidia saw its shares drop nearly 20% in the weeks following its last release, only to rise nearly 35% from that low. There’s good reason to remain optimistic as the year ahead is full of major catalysts for the company.
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On Tuesday, December 3, Nvidia joined other leading artificial intelligence (AI) companies to discuss the future of the sector with the investment community. The annual one UBS The Global Technology and AI Conference offers Nvidia an opportunity to demonstrate continued leadership and argue why it has so much further to go. The event combines the technical with the practical and sheds light on how impactful AI can be in creating value in the real world.
Although it is unlikely that one event will be decisive, the company – and the industry for that matter – has every chance to make its case. Here are three reasons why Nvidia is a buy as the event gets underway.
Look, this is hardly news, but it’s worth repeating: the AI market is huge and growing rapidly, and there are plenty of reasons to believe it will stay that way. PwC – one of the ‘big four’ accounting firms – believes AI could add $15.7 trillion to the global economy by 2030. Statista predicts a compound annual growth rate (CAGR) for the overall AI market of 28.3% through 2030.
It’s not just the analysts and talking heads who think that; CEOs from across Silicon Valley reiterated their commitment to AI and, more specifically, to spending billions of dollars on AI infrastructure. In MetaDuring his latest earnings call, CEO Mark Zuckerberg stated that despite record investments, his company should “invest more” because AI will “accelerate.” [Meta’s] core business” and “should have a strong ROI in the coming years.
That’s great news for Nvidia. The company’s chips power the vast majority of the industry, and this market dominance is expected to continue for the foreseeable future. Not even at this moment AMD can offer a chip that rivals the performance of Nvidia’s flagship chips. While this lead will likely diminish as time goes on, it’s doubtful Nvidia’s will make a leap forward. Nvidia has enormous resources – in capital and talent – that it can use to defend its pole position.
Blackwell, Nvidia’s newest line of Superchips, is coming out this month and samples are already in the hands of many of its major customers. The chips are incredibly powerful, more than twice as powerful as current Hopper chips, and demand for them is at a fever pitch. CEO Jensen Huang described the demand as “mind-boggling” and reports indicate the company has been sold out for an entire year.
This is a big moment for Nvidia, and Wall Street is eager to see the company deliver a successful launch. If any problems are expected, Nvidia’s management team certainly didn’t share them in the Q3 numbers. The team painted a rosy picture for the following year and Blackwell’s rollout, expecting more Blackwells to be shipped than previously expected. I think there’s a good chance that Blackwell revenues will be even bigger than Wall Street expects, but we’ll learn a lot more in the coming months.
The term has been thrown around a lot lately, but a big focus of Nvidia’s call, aside from Blackwell’s launch, was the development and adoption of agentic AI – essentially AI that can actually Doingnot just create. Jensen Huang likes to think of them as “AI colleagues” who can “help employees do their jobs faster and better.”
I think AI, when done right, is the real value of AI. This is where real efficiencies can be achieved in all types of organizations. One of the ongoing questions in the market as a whole is whether AI can deliver value that justifies the enormous costs associated with it. If it can be done, we will see it here.
Nvidia is ahead of this trend, offering “a platform for agentic AI,” as Huang puts it, highlighting that industry leaders are already using it to build “copilots” – an industry term for AI helpers and agents.
Consider the following before buying shares in Nvidia:
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Randi Zuckerberg, former director of market development and spokeswoman for Facebook and sister of Mark Zuckerberg, CEO of Meta Platforms, is a member of The Motley Fool’s board of directors. Johnny Rice has no position in any of the stocks mentioned. The Motley Fool holds positions in and recommends Advanced Micro Devices, Meta Platforms, and Nvidia. The Motley Fool has a disclosure policy.
3 Reasons to Buy Nvidia Stock as the UBS Global Technology and AI Conference Kicks Off was originally published by The Motley Fool
