Can Nvidia keep rising now that it’s the world’s largest stock?
Nvidia (NVDA) just passed Microsoft (MSFT) to become the world’s most valuable company.
NVDA was worth $160 billion when I first recommended it back in 2018.
Here’s a snapshot of my 2018 article:
Now, Nvidia is the largest stock in the world worth a staggering $3.34 TRILLION:
Congrats to RiskHedge readers who capitalized on NVDA at any point along its historic rise.
Can Nvidia keep going up?
We’ve taken profits on NVDA twice in my Disruption Investor advisory.
And I believe it will continue to thrive in the years ahead.
The amount of money companies are spending on AI today is staggering.
Microsoft, Amazon, Google, and Facebook will spend over $170 billion this year alone building AI data centers.
Data center spending is expected to top $200 billion in 2025. And analysts expect the global capacity of hyperscale data centers to grow 3X over the next six years to meet the world’s AI needs.
Nvidia will capture a large share of that spending.
The company essentially has a monopoly on the computer chips needed to keep powering the artificial intelligence (AI) boom.
Its GPUs power anywhere from 80% to 95% of all AI workloads, according to analysts. That includes OpenAI’s ChatGPT, the fastest-growing app ever.
Fundamentally, Nvidia is as strong as ever.
Nvidia is growing revenues at a staggering 260% per year, that’s how strong the demand for its AI chips is.
Nvidia has done nothing but deliver. It continues to produce incredible results that will be legendary.
As my partner Chris Wood said in a recent Disruption Investor issue:
“What’s interesting is that Nvidia stock still isn’t all that expensive when you consider its earnings growth. My model shows NVDA could double from here in the next two to three years pretty easily. So it’s still a good buy today for folks who don’t own it yet.”
Is Nvidia the best AI stock?
While Nvidia is the most obvious winner from all the money being thrown at data centers today, it’s certainly not the only company benefiting directly from this investment.
The big AI investing opportunity is in the next wave of AI winners essential to the great infrastructure buildout.
The thing is Nvidia is moving too fast for its own good. Its AI chips are 100X faster than they were a decade ago.
All the other parts that make up a data center — networking equipment that allows the chips to “talk” to each other and so on — have only gotten about 4X faster.
This creates a major bottleneck where Nvidia’s chips can only work 30% of the time. The other 70% of the time, these $50,000 chips sit idle… but still take up full power.
It’s like driving a Ferrari in Manhattan. You can only go so fast.
Nvidia will keep on winning. But I expect a lot of spending to shift toward the lagging parts of the data-center equation: cooling equipment, storage, next-gen fiber optic cables, and so on.
Those are the AI stocks you want to be investing in next.
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I publish fresh research every M/W/F.
