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Over the past year, few stocks have been better to own. Nvidia (NASDAQ:NVDA)It’s up 400% since the beginning of 2023. And year-to-date, he’s already up nearly 50%.
Unfortunately, I missed out on the profits after selling the stock last July. But it’s never too late to admit you were wrong and consider buying back. However, at the current stock price, many may question this decision. So why are you considering buying now? Read on to find out.
Nvidia’s growth is unparalleled
Nvidia’s main product is GPUs (graphics processing units). This computing hardware is customized to handle complex computing tasks. Originally designed to process game graphics, its applications have expanded to tasks such as drug discovery, engineering simulations, mining cryptocurrencies, and training AI models.
Artificial intelligence is Nvidia’s latest demand driver, and the results are impressive. Revenues for the third quarter of 2024 (ending October 30) totaled $18.1 billion, an impressive 206% year-over-year increase. But this is not the end, as management expects fourth-quarter sales to more than triple year-over-year to about $20 billion.
Growth of this magnitude is almost unprecedented for a company of Nvidia’s size, making this stock a pretty incredible story.Recently, Nvidia surpassed Amazon and alphabet Becomes the third largest company in the US by market capitalization.
Having missed out on much of the stock’s meteoric rise, I believe it’s time to right that wrong.
Stock prices are high, but will drop soon
Looking back over the past year, we realize that we misjudged the market opportunity for Nvidia products. I thought that once the initial onslaught of AI-driven GPU demand for him was over, revenues would fall off a cliff. This is exactly what happened in 2019 and 2022 when the cryptocurrency market crashed and the demand for GPUs decreased.
I still believe this drop will happen, but it won’t happen as quickly as I expected. The demand for Nvidia’s GPUs is incredible.take Tesla, for example. After they spent $300 million on his Dojo computer with 10,000 H100 GPUs, I thought this would be the only thing they would build.
But Tesla announced it would spend an additional $500 million on a second Dojo computer powered by Nvidia GPUs at its Buffalo, New York, factory. CEO Elon Musk also said on the company’s fourth quarter conference call that beyond this he plans to add Dojo computers.
Obviously, the demand is greater than I anticipated, so I’d like to get back into it, especially since this trend is several years old. Precedence Research predicts that the global GPU market will reach approximately $773 billion in 2032, up from $42 billion in 2022. Nvidia’s trailing 12-month total revenue of $45 billion gives it a significant foothold in this growing market.
But is now really the best time? It’s not what we should have done a few months ago, but it’s not too late to change our stance on generational companies.Many investors like Amazon and Netflix Even though I was late to the party in the early years, I still made a lot of money on those stocks.
NVIDIA likely offers a similar opportunity today, if you can stomach a stock with a P/E ratio of nearly 100x.
However, this valuation becomes much more convincing when we look at the analysts’ earnings forecasts for the next 12 months. microsoft It trades at the equivalent of 35 times forward earnings estimates.
My position at Nvidia will be quite small to begin with, but it will be large enough to keep an eye on the company and ensure I have a stake in what is shaping up to be one of the most important companies of this decade. will play a role. I missed the first big move, but if the AI market is as huge as some predict, there is room for further upside.
Should you invest $1,000 in Nvidia right now?
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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. Keithen Drury has held positions at Alphabet, Amazon, and Tesla. The Motley Fool has positions in and recommends Alphabet, Amazon, Microsoft, Netflix, Nvidia, and Tesla. The Motley Fool recommends the following options: His long January 2026 $395 call on Microsoft and his short January 2026 $405 call on Microsoft. The Motley Fool has a disclosure policy.
“Why You Might Change Your Mind and Buy Nvidia Stock” was originally published by The Motley Fool
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