How to Buy NVIDIA Stock Pros, Cons & Where to Buy

Before joining Finder in 2021, Matt covered everything from finance news and banking to debt and travel for FinanceBuzz. His expertise and analysis on investing and other financial topics has been featured on CBS, MSN, Best Company and Consolidated Credit, among others. Matt holds a BA in history from William Paterson University. Information on this page is for educational purposes only and not a recommendation to invest with any one company, trade specific stocks or fund specific investments. When Nvidia was founded in 1993, it would have been hard to imagine that the hardware it was pioneering, the graphics processing unit (GPU), would have such a transformative effect on the technology landscape. For the fiscal third quarter ending October 2023, Zoom revenue grew a mere 3% to $1.14 billion while earnings increased to $1.09 a share.

While soaring chip demand is driving NVIDIA’s record financial results, the company still has been concerned about possible shortages because it’s a “fabless company” (see the FAQs section below). Instead, it designs chips and outsources the manufacturing to third-party companies to do the fabrication. NVIDIA could thus still be affected by the shortage if its third-party suppliers cannot manufacture chips fast enough to meet soaring demand. Given its large market cap, Nvidia is among the top five holdings of the five largest ETFs by assets under management (AUM).

Later, in 199, the company will invet the GPU and change the world of computing forever. The GPU will not only enhance the graphics capabilities of the PC but lead to accelerated-computing and AI as well. In 2015, Nvidia dove head-first into the artificial intelligence space, https://traderoom.info/ releasing its first “Drive” chip for autonomous driving in cars, as well as its “Jetson” chip made for embedded computing on smaller AI-powered devices. Perhaps the most consequential advance in Nvidia’s history was the 2006 launch of the company’s CUDA development platform.

Jen-Hsun Huang has an approval rating of 99% among the company’s employees. This puts Jen-Hsun Huang in the top 10% of approval ratings compared to other CEOs of publicly-traded companies. The newly created shares were issued to shareholders after the closing bell on Tuesday, July 20th 2021.

Today, NVIDIA Corporation is the only remaining independently operating graphics-focused microchip company in operation. On January 22, 1999, the company holds its initial public offering on the Nasdaq exchange the Nvidia stock price was $12 a share. Just two years after going public, trading212 broker Nvidia was added the the S&P 500 in 2001. The company was the fastest every semiconductor company to reach $1 billion in revenue. Alphabet products like Google, YouTube, and Android attract billions of users, giving the company almost endless ways to monetize its AI technology.

What’s more, a look at consensus growth estimates suggests that Microsoft’s revenue is anticipated to increase in the mid-teens over the next couple of fiscal years. It’s not a coincidence that Supermicro stock delivered results similar to Nvidia last year. Nvidia’s cloud market, in short, has legs, which bodes well for NVDA stock.

Google Cloud revenue rose 25% in the quarter, strengthening the company’s outlook in AI. While chip stocks have become a favorite on Wall Street for investing in AI, software companies like Alphabet (GOOG 0.64%) (GOOGL 0.76%) shouldn’t be overlooked. Typically, a company with low gross margins does not have pricing power, or it’s competing on cost. That’s much different from Nvidia, which has been able to raise prices on its AI chips because there’s a shortage of them and its competitors can’t match its performance, at least not yet. Supermicro didn’t offer much of an explanation for the soaring growth, only saying that it had strong market and end customer demand. Investors will likely learn more when Supermicro reports its complete second-quarter earnings report after hours on Monday.

1. One of three positive chart patterns to look for when doing technical analysis.
2. The miners exacerbated the oversupply problem by unloading their now-unwanted GPUs into the secondary market.
3. The US chipmaker’s stock sits at an all-time high after adding roughly $200bn to its valuation overnight on a revenue forecast far ahead of consensus.
4. Just two years after going public, Nvidia was added the the S&P 500 in 2001.

While Microsoft is a play on the software side of the AI market, Nvidia sells the hardware on which the services that the former is selling are trained. For instance, OpenAI used an estimated 30,000 graphics cards from Nvidia to train ChatGPT. Market research firm Omdia estimates that Microsoft purchased an estimated 150,000 units of Nvidia’s flagship H100 AI-focused graphics card in 2023. In its fourth quarter of 2023, Alphabet posted revenue growth of 13.5% year over year, beating Wall Street estimates by more than $1 billion. The company’s ad revenue fell shy of forecasts, but its cloud division beat expectations.

Microsoft’s AI business has gained impressive traction

With its dominating role in GPUs, Nvidia was well equipped to supply its hardware to the entire market. As a result, the company’s shares rose 239% in 2023 while earnings soared (as seen in the chart). This “private cloud market” was worth $12.8 trillion in 2022, growing at over 20% per year, and should be worth over $28 trillion in 2028. These companies aren’t big enough to create their own hardware, like the Cloud Czars. They’re either accepting the cost of Nvidia upgrades or looking for cheaper substitutes.

NVIDIA Insider Activity

Despite competitive challenges, with its even-more advanced H2000 AI chips expected in 2024, Nvidia will maintain its hold on “more than 85% of the market for generative-AI chips next year,” according to the Journal. During the pandemic, Zoom lived up to that promise and it benefited greatly from the resulting surge in demand for its services. As the pandemic ended, Zoom did not find a new growth curve.

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During downturns, demand for NVIDIA’s products may decrease, leading to lower revenue and profits. So, Nvidia could become a bigger company than Microsoft before 2030 in terms of market cap, given the much faster growth it may achieve because of its dominant position in the AI chip market. Just like Microsoft, Nvidia is reaping the benefits of growing AI adoption, though in a much bigger way. The semiconductor giant has been growing much faster than Microsoft, which explains why its stock price growth has outpaced the latter. However, can Nvidia sustain its faster growth and become more valuable than Microsoft by 2030? Over the last year, AWS has responded to increased demand for AI services by expanding its offerings.

Its chips and related software power the fastest, highest-resolution graphics and are featured in a line of products that include solutions for all end-market uses. Along with gaming, NVIDIA microchips are used in visualization, datacenter, AI, and autonomous vehicles just to name a few. According to Japanese investment bank Mizuho, Nvidia may even generate annual revenue of $300 billion by selling AI chips in 2027.

Finder monitors and updates our site to ensure that what we’re sharing is clear, honest and current. Our information is based on independent research and may differ from what you see from a financial institution or service provider. When comparing offers or services, verify relevant information with the institution or provider’s site. CEO Jensen Huang “pushed back strongly” in response to questions about whether the company’s data center growth has peaked. One of three positive chart patterns to look for when doing technical analysis. It usually occurs after a stock has advanced off of a “cup with handle” or “double bottom” pattern.

As I learned from interviewing Yuan, he started the videoconferencing platform knowing it was entering a crowded market. He believed he could create a company that would delight employees and customers. Should Nvidia one day report slower than expected revenue and lowered guidance, its stock will almost surely plunge.

Several other ETFs offer greater exposure to Nvidia stock. The VanEck Semiconductor ETF (SMH 0.92%) is a reasonably large ETF with a higher portfolio weighting to Nvidia (19%), making it a possible alternative for investors seeking passive exposure to the stock. The company produced $5.6 billion of cash from operations in its 2023 fiscal year and almost $3.8 billion of free cash flow. If you’ve decided to invest in NVIDIA and add it to your portfolio, follow these steps to acquire shares. 783 employees have rated NVIDIA Chief Executive Officer Jen-Hsun Huang on Glassdoor.com.