Nvidia faced a rough couple of days in early August when global market chaos, linked to the yen-carry trade, took a toll on its shares. A general turmoil in the market led investors to wonder: “Is Nvidia a good stock to buy?”
From that point forward, the stock has bounced back impressively, surging 20% as investors place their bets on Nvidia’s lineup of cutting-edge AI chips and processors. The buzz is that these tech marvels will keep Nvidia at the top of the market well into 2025 and beyond.
If you’re considering whether to buy Nvidia stocks, you’re not alone. The chip giant’s performance and potential are making waves, and here’s why investing in Nvidia might be a winning strategy.
The AI boom is a catalyst for Nvidia’s continual growth
Back in 2023, Nvidia’s stock took center stage, thanks to the explosive growth in artificial intelligence (AI). Now, AI isn’t just a buzzword; it’s a booming industry set to expand significantly over the next decade. According to Grand View Research, AI is projected to grow at a staggering 36.6% compound annual growth rate (CAGR) until 2030.
This isn’t just good news for AI enthusiasts; it’s fantastic news for Nvidia. As the industry grows, Nvidia is poised to capture a significant share of this expanding market. In fact, the company has positioned itself to grow its revenue by triple digits year-over-year.
Tech giants are not just dipping their toes into AI, they’re diving in headfirst. Ex-Google CEO Eric Schmidt recently highlighted that some companies are ready to invest $20-100 billion in AI infrastructure. This massive commitment means that Nvidia, a leading player in AI technology, stands to benefit immensely.
For investors looking to buy Nvidia stocks, this growth potential is a compelling reason to consider getting on board.
Nvidia’s competitive advantage in AI
One of the biggest reasons Nvidia is a standout choice in the tech sector is its unparalleled technology.
Nvidia designs and manufactures graphics processing units (GPUs) that have no competition and are critical for AI applications. Even as competitors develop their own AI solutions, Nvidia’s innovations and strong relationships with major tech companies keep it ahead of the pack.
Big tech firms continue to rely on Nvidia’s state-of-the-art technology, which speaks volumes about the company’s dominance in the market.
The company’s technology leadership allows it to command premium prices and maintain a competitive edge that’s hard to match. For anyone wondering if Nvidia is a good stock to buy, this competitive advantage is a crucial factor to consider.
Soaring AI demand
The growing demand for AI technology is a positive signal for Nvidia’s future.
Consider Super Micro Computer, a partner of Nvidia. This company has seen its revenue more than double year-over-year and expects similar growth in the upcoming fiscal year. Super Micro’s success is tied to its use of Nvidia’s technology, indicating that the demand for Nvidia’s products is also on the rise.
Nvidia’s own earnings reports reflect this strong demand. In the first quarter of Fiscal 2025, Nvidia reported a jaw-dropping 262% year-over-year increase in revenue and a 628% jump in net income. With such impressive financials, Nvidia’s bullish outlook for the future is no surprise.
If you’re thinking about buying Nvidia stocks, these robust earnings figures are a clear sign of the company’s strong market position.
What’s next for Nvidia?
Nvidia’s stock has been on a remarkable upward trajectory, up 151% year-to-date. Even minor setbacks, like a design issue causing delays in the Blackwell chip’s shipment, haven’t significantly affected its momentum.
Analysts like UBS’s Timothy Arcuri remain optimistic about Nvidia’s future, despite minor delays. Arcuri’s projections still suggest significant upside for Nvidia’s stock, and his target price indicates a potential 20% increase over the next year.
On the other hand, Goldman Sachs analyst Toshiya Hari is keeping his positive outlook on Nvidia, sticking with a ‘conviction buy’ rating and a price target of $135 as we head into next week’s financial update. According to Hari, the demand for Nvidia’s products remains incredibly strong and continues to drive impressive growth.
For the three months ending in July, analysts expect Nvidia to report adjusted earnings of 64 cents per share. On top of that, revenue is projected to skyrocket nearly 90% compared to the same period last year, hitting a whopping $25.6 billion.
Investors are also encouraged by Nvidia’s strong guidance. For the second quarter of Fiscal 2025, Nvidia is expected to generate around $28 billion in revenue. However, given Nvidia’s track record of exceeding expectations, it’s possible that the company’s revenue could surpass $30 billion, further solidifying its growth trajectory.
Hari points out that from an investment standpoint, Nvidia’s stock is in a promising position. It’s currently trading at 42 times the consensus earnings per share for the next year, which is a relatively modest premium of just 46% compared to its three-year median of 151%.
In other words, Nvidia’s stock isn’t as overpriced as it has been in the past, making it a potentially attractive buy. His updated Bull/Bear framework suggests that the risk/reward balance is skewed in favor of the bulls, indicating a favorable outlook for the stock.
Is Nvidia a good stock to buy?
Nvidia’s impressive growth, strong market position, and the booming AI industry make it a compelling stock to consider. With its cutting-edge technology and robust financial performance, Nvidia continues to be a leading choice for investors.
The consensus among Wall Street analysts is overwhelmingly positive. Nvidia has received 37 Buy ratings and just four Hold ratings in recent months, earning a Strong Buy consensus.
The average price target suggests a 16% upside from current levels, with the highest target indicating a potential 61% gain. These optimistic ratings reflect Nvidia’s strong market position and future potential.
How to buy Nvidia stocks?
If you’re interested in the prospect of buying Nvidia stocks and want to get started, consider using FlexInvest.
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The best part is that with its fractional shares feature, you can start investing in big companies with as little $5. So, if you think Nvidia is a good stock to buy, FlexInvest is the ideal platform to embark on your investment journey.
Information in this post is for general informational purposes only. It cannot and should not be considered as suggestions or recommendations regarding investing or financial decisions.
