Nvidia’s (NASDAQ: NVDA) earnings have surged, leading to astonishing stock performance. Shares of the technology giant have soared 2,500% over the past five years. Despite a recent slowdown, the shares have still advanced about 120% since the start of this year.
This growth is largely due to Nvidia’s dominant position in the booming artificial intelligence (AI) market. The company controls 80% of the AI chip market, thanks to its powerful graphics processing units (GPUs), which are essential for the training and inference of large language models (LLMs).
With competitors launching rival products, some investors wonder if Nvidia’s biggest growth wave is over. However, my prediction is that Nvidia’s biggest growth driver is just around the corner. Let’s explore this further.
Nvidia and AI
Nvidia’s journey began as a giant in the video game market, with its GPUs enhancing gaming experiences. Recognizing the broader potential of its GPUs, Nvidia pivoted to focus on AI, designing GPUs for AI platforms.
Nvidia’s ecosystem now includes a range of products and services for AI, making it the preferred provider for industry leaders like Meta Platforms and Tesla. Tesla CEO Elon Musk recently praised Nvidia’s hardware, highlighting the immense demand for its GPUs.
Enter Blackwell Architecture
Nvidia’s growth story is far from over, with the upcoming Blackwell architecture and chip poised to drive the next growth phase. Blackwell features six transformative technologies, including enhanced security, reliability, and top performance in data analytics. Nvidia’s first-quarter earnings report revealed that Blackwell is in full production, with global availability expected later this year. Demand already surpasses supply, and this trend is expected to continue.
Future Growth Prospects
Blackwell’s improvements in performance, such as enabling generative AI on LLMs with up to 25 times less cost and energy consumption, signal a new era of growth. Nvidia CEO Jensen Huang anticipates significant revenue from Blackwell this year.
For investors, Nvidia shares are currently trading at 39 times forward earnings estimates. Considering Nvidia’s track record and the imminent Blackwell launch, this valuation is reasonable. While immediate gains might not be guaranteed, Nvidia’s long-term growth potential remains robust.
I predict that Blackwell will be the catalyst for Nvidia’s next era of massive growth. Investors should consider capitalizing on this opportunity, especially given the recent dip in stock prices.
Should you invest $1,000 in Nvidia right now?
Before investing in Nvidia, consider this: The Motley Fool Stock Advisor analyst team recently identified the 10 best stocks to buy now, and Nvidia wasn’t one of them. These stocks could deliver significant returns in the coming years.
Consider when Nvidia made this list on April 15, 2005. If you had invested $1,000 then, your investment would be worth $657,306 today!
