NVIDIA Tops $3.5T Milestone - Good Time to Buy NVDA Stock?
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Jensen Huang’s NVIDIA Corporation NVDA recently achieved a new milestone and is now part of an elite club. And with the NVIDIA stock hitting record highs, investors must lament not owning the stock. But it’s not too late to buy the stock either! Let’s see why –
NVIDIA Reaches $3.5 Trillion Market Cap
Among the chip stocks, NVIDIA stood out on Monday after its shares gained 4.1% and closed above $3.5 trillion market capitalization for the first time. In June, NVIDIA surpassed the $3 trillion market value and was worth more than Apple Inc. AAPL.
However, Apple became the first company to hit the $3.5 trillion milestone and is now valued at $3.6 trillion. Nevertheless, NVIDIA’s stellar performance in recent times may soon propel it past Apple. NVIDIA’s shares have surged 243% over the past year and a staggering 543% in the last three years primarily due to the advent of artificial intelligence (AI).
4 Reasons Why NVIDIA’s Shares Will Continue to Rise
Insane demand for NVIDIA’s most sought-after cutting-edge Blackwell B200 chips, which have more AI throughput than the current Hopper H100 chips, would boost its share price. NVIDIA has ramped up the production of Blackwell chips as demand has skyrocketed among the likes of Microsoft Corporation MSFT and Alphabet Inc. GOOGL.
NVIDIA’s growing data center business will likely boost the stock. The H100 chips are expected to be extensively used in powering generative AI applications including ChatGPT. Big tech players continue to show keen interest in AI data centers, which is encouraging for NVIDIA. For instance, Microsoft in its latest 10-K annual report has indicated spending $108.4 billion on data centers over the next five years.
NVIDIA’s dominance in the graphic processing units (GPU) market space also gives the company a competitive edge over its peers. Most developers prefer NVIDIA’s CUDA software platform over the arch-rival Advanced Micro Devices, Inc.’s AMD ROCm software platform. NVIDIA accounts for 80% of the GPU market, which is projected to grow to $1,414.39 billion by 2034 from the present $75.77 billion, according to Precedence Research.
Lastly, the Federal Reserve’s recent aggressive interest rate cuts, with more to come amid ebbing price pressure, are acting as a tailwind for NVIDIA’s shares. This is because interest rate cuts would curtail borrowing costs, jack up profits, and won’t disrupt cash flows much needed for growth initiatives (read more: NVIDIA & 2 Other AI Stocks to Gain From Lower Interest Rates).
NVIDIA Stock to Buy Hand Over Fist
From the Fed’s dovish stance to being the pioneer in the GPU market to blossoming data center business and sheer demand for AI chips, NVIDIA’s shares are all set to climb further northward, making it a compelling buy.
