Well-acquainted with towering tech giants such as Nvidia, the artificial intelligence (AI) trailblazer has been soaring to unparalleled heights. In recent times, Nvidia briefly took the crown as the world’s most valuable company, edging out established stalwarts like Apple and Microsoft.
With a stranglehold on the data center GPU market, boasting a staggering 98% market share in 2023, Nvidia’s dominance seemed unassailable. However, as the cliché goes, success breeds competition.
Rivals like AMD and Intel have emerged on the scene, flexing their muscles with their own AI GPUs, unsettling even seasoned investors like Stanley Druckenmiller, who drastically pruned his Nvidia stake. Yet, amid this turbulence, one figure emerges as a staunch advocate for Nvidia – none other than Tesla’s prolific chief, Elon Musk.
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Nvidia’s Resilient Demand and Musk’s Covert Validation
Operating in a realm thirsting for cutting-edge AI hardware, Tesla stands as an avid consumer of Nvidia’s components. Musk’s praise for Nvidia’s prowess on Tesla’s recent earnings call was nothing short of glowing. He emphasized the surging demand for Nvidia hardware, citing difficulties in acquiring GPUs due to overwhelming market appetite.
Admittedly, competitors like AMD and Intel did throw their hats into the ring with rival products – the MI300 and Gaudi 3. Nevertheless, Nvidia’s stronghold in the data center GPU realm seems untainted, with demand surging and shortages persisting. Musk’s disclosure on Nvidia’s escalating GPU prices further seals the case for its robust market position.
Riding the Musk Wave – Implications for Nvidia Stock
While Nvidia braces for intensified competition, dismissing its products as mere commodities ripe for replication would be imprudent. Musk’s unequivocal praise for Nvidia’s hardware serves as a testament to its unmatched quality and execution.
Amid apprehensions of a market correction in a stock propelled by a meteoric rise, insights from Musk underscore Nvidia’s resilience. With demand outstripping supply even after the ChatGPT launch, Nvidia remains attractively priced with a forward P/E ratio of 40, remarkably cheaper than Tesla and AMD, and only marginally costlier than a beleaguered Intel.
Given Musk’s vote of confidence and Nvidia’s entrenched superiority in GPUs, the ride seems far from over for investors eyeing Nvidia stock.
Timing Your Nvidia Investment Wisely
Before plunging into Nvidia shares headlong, prudent investors ought to heed caution.
The Motley Fool Stock Advisor team, reputed for identifying lucrative investment prospects, notably omitted Nvidia from their list of top 10 stocks. This note of caution is worth considering, given Nvidia’s omission from this select group.
Reflecting on Nvidia’s inclusion in the Stock Advisor lineup back in 2005 paints a telling picture – an initial $1,000 investment then would have ballooned to a staggering $692,784 now. The service’s track record eclipsing the S&P 500’s return since 2002 echoes its merit.
*Stock Advisor returns as of July 29, 2024
Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Apple, Microsoft, Nvidia, and Tesla. The Motley Fool recommends Intel and recommends the following options: long January 2025 $45 calls on Intel, long January 2026 $395 calls on Microsoft, short August 2024 $35 calls on Intel, and short January 2026 $405 calls on Microsoft.
