Is it finally time to cash in on Nvidia?

One of the leaders of the artificial intelligence (AI) revolution is Nvidia (NASDAQ:NVDA). Demand for the company’s graphics processing units (GPUs) and data center services is surging along with interest in generative AI.

Nvidia’s stock price soared 280% last year. Given the stock’s relentless rise, some investors may be wondering if it’s time to take profits.

Let’s dig into the full story surrounding Nvidia and determine whether it makes sense to cut its position.

The Nvidia train is running full speed…

Last year was a landmark year for Nvidia. The company increased its profits by 126% while increasing its cash flow six times as much. With such impressive results and an optimistic outlook, it’s no wonder investors are rushing into this stock. And just to add some color here, Nvidia has increased its market cap by $1 trillion in less than two months.

That’s a rise of epic proportions. Nvidia is now his third most valuable company in the world, coming in second place. microsoft and apple.

Some investors may be considering taking profits after the recent share price rally. I don’t blame them, but as an Nvidia investor myself, I’d like to share why I think even better days are ahead.

…could easily go into another gear

Investors need to be aware that much of Nvidia’s growth last year came from its computing and networking business. But there are plenty of opportunities beyond GPUs and data center services.

The company had $26 billion in cash on its balance sheet at the end of 2023, double what it had at the end of 2022. Over the past few months, the company has been actively investing in new areas of AI that can be used to complement its hardware operations.

Specifically, Nvidia invested in two different software businesses. Soundhound AI, and big data analytics startup Databricks. I think these are particularly smart moves. AI-powered voice control is an area of ​​interest for many of Nvidia’s largest technology companies.

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apple, Amazon, alphabet, Microsoft has all invested in this technology and implemented it in their respective product lines of smart home and personal computing products. His Nvidia move in this little-known AI field is understandable, considering the addressable market for voice recognition applications is expected to reach $50 billion by the end of the 2010s. .

Another area Nvidia is investing in is robotics. The company recently joined Microsoft. inteland OpenAI participated in a funding round for Figure AI, which is developing a humanoid robot with plans to commercialize it in manufacturing, warehousing, and retail.

goldman sachs estimates that humanoid robots could grow to a $38 billion market by 2035. The combination of his GPU hardware from NVIDIA and its burgeoning software services business puts the company in a unique position to further his Figure AI ambitions in a number of ways.

Is now the time to profit?

All the investments outlined above tell us one thing. That means Nvidia’s journey isn’t over yet. The company is planning for the future and isn’t sitting on a hardware cash cow.

This is why I’m optimistic about this company. Yes, the stock price has gone parabolic and many investors may have made significant amounts of money. However, selling a stock simply because the price has changed is not a sound financial decision, it is an emotional one.

We understand that it is tempting to earn some profit at this time. There are many unknowns when it comes to AI, including emerging developers and potential regulatory actions. What the Fed will or won’t do this year is a mystery at best, and this could increase market volatility in the short term.

But investors need to think about the long-term implications here. The story of artificial intelligence (AI) is just beginning, and investors have an obligation to stay tuned for the next few chapters of the story. For these reasons, I will continue to own his Nvidia, as it remains one of the strongest opportunities in the AI ​​space at this time.

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Alphabet executive Suzanne Frye is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Amazon subsidiary Whole Foods Market, is a member of the Motley Fool’s board of directors. Adam Spatacco has held positions at Alphabet, Amazon, Apple, Microsoft, and Nvidia. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Goldman Sachs Group, Microsoft, and Nvidia. The Motley Fool recommends Intel and recommends the following options: Long January 2023 $57.50 call on Intel, Long January 2025 $45 call on Intel, Long January 2026 $395 call on Microsoft, Short January 2026 $405 call on Microsoft. call, and a May 2024 $47 short call. Intel. The Motley Fool has a disclosure policy.

Is it finally time to cash in on Nvidia? Originally published by The Motley Fool