Historically, few companies have demonstrated the potential of more billionaires nvidia (NASDAQ: NVDA). The tech giant’s stock has skyrocketed over 22,000% over the past decade, generating wealth for many shareholders In the process.
However, it has a market capitalization of $3 trillion, and Nvidia is already the third largest company in the world. The growing concerns about the sustainability of AI hardware spending have raised questions about how realistic it can rise. Let’s dig deeper and see what the future holds.
Since Openai’s ChatGpt was launched in 2022, the tech giant has been rushing to stay competitive in the market Big language model (LLMS), a type of AI algorithm that can create conversational responses based on a trained dataset. To this end, they have poured billions of dollars into purchasing Nvidia’s cutting-edge graphics processing units (GPUs) to train and run these complex programs.
for Like a hyperschool alphabet and Amazonthis spending clearly has business implications This is because AI computing power can be “rented” to startups through cloud computing platforms. However, for other major clients Meta Platform (This is planning to spend between $65 billion and $65 billion mainly on AI-related matters. Capital expenditure), the potential returns to pour a lot of money into the nvidia hardware look weak.
Meta appears to be trying to remain relevant to opportunities that I don’t have it A clear way to monetize. And it may be only a matter of time before the company’s shareholders oppose all this speculative spending. Otherwise it can be used Share dividends or buybacks.
Although current AI spending may prove unsustainable in the long term, this challenge has not yet been manifested in Nvidia’s operational results. Q3 revenue rose 94% to $35.1 billion, based on massive demand for high-end data center chips to train LLMS.
Despite selling hardware, the total profit margin for many software companies is the margin for many software companies, with operating profit doubled to about $21.9 billion in the third quarter.
Products based on Nvidia’s new Blackwell GPU architecture are committed to supporting continuous growth and profitability over the next quarter. And so far, the emergence of low-cost Chinese rival Deepseek (who claims to have trained industry-leading LLMs with “primitive” H800 chips) has led to the demand for Nvidia’s latest chips There is little evidence of it being damaged.
Some industry experts argue that Deepseek may have technology that has been improperly copied from US rivals like Openai through distillation. This is the process of transferring knowledge from a more advanced model to a smaller model. In the truth, this suggests that even if others later copy these models using inexpensive chips, Nvidia’s cutting edge GPUs still help to create the most advanced LLMs I will.
Image source: Getty Images.
With just 29 (p/e), the inventory is surprisingly affordable and takes into account its incredible growth rate. For the context, NASDAQ-100 Even if there is something comparable to the business expansion of its member rival Nvidia, the average forward P/E has an average P/E of 31.
Even though I say thatWith its market capitalization of $3 trillion, it’s difficult to see NVIDIA generate multibugger returns from here, especially given that current AI hardware spending could begin to decline over time.
The age of equity billionaires seems to be far behind. And return investors should probably look for more under radar ways to bet on AI opportunities.
Have you ever felt like you missed a boat when buying the most successful stocks? If you do that, you’ll want to hear this.
In rare cases, the team of analyst experts “Double Down” stock Recommendations for businesses they think are trying to pop. If you’re worried that you’ve already missed the chance to invest, now is the perfect time to buy before it’s too late. And the numbers speak for themselves:
nvidia:If you invest $1,000 when it doubled in 2009,There is $336,677! *
apple: If you invest $1,000 when it doubled in 2008, There’s $43,109! *
Netflix: If you invest $1,000 when it doubled in 2004, There is $546,804! *
Currently, we are issuing “double-down” alerts to three incredible companies, and we may not have a chance like this anytime soon.
Randi Zuckerberg, a former director of market development, Facebook spokeswoman and sister to Metaplatform CEO Mark Zuckerberg, is a member of Motley Fool’s board of directors. John Mackey, former CEO of Amazon subsidiary Whole Foods Market, is a member of Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of the board of directors of Motley Fool. Will Ebiefung There is no position in any of the stocks mentioned. Motley Fool has positions for Alphabet, Amazon, Meta Platforms and Nvidia, and is recommended. To Motley’s fool Disclosure Policy.
