$4 Billion Reasons to Buy Nvidia Stock Right Now

Nvidia (NVDA -3.66%) the stock has risen over the past five years as the company has consolidated its dominance in the high-growth artificial intelligence (AI) chip market. The tech giant owns about 80% of this market thanks to the power of its graphics processing units (GPUs) — their ability to process multiple tasks simultaneously makes them perfect for critical AI tasks like model training.

Sales of chips and other AI products and services helped Nvidia grow its data center revenue by triple digits to record levels. In the most recent quarter, revenues from this business exceeded $26 billion. That’s huge considering that revenue for the entire company totaled $27 billion in fiscal 2023 alone.

However, after such winnings and stock performance, you may be wondering if it is too late to enter this AI player and if the greatest opportunity to win has passed. It is impossible to predict with 100% accuracy whether Nvidia will repeat its past performance. But it’s fair to say that the drivers of earnings growth are not only still there, they’ve multiplied — and as earnings rise, so might the stock price. Let’s check out four billion-dollar reasons to buy Nvidia now — each will add major growth to Nvidia’s top line going forward.

Image source: Getty Images.

1. Nvidia’s growing strengths in networking

Nvidia has generally stood behind its InfiniBand platform for networking or transmitting data across devices. But Ethernet remains more widely used because of the compatibility between device types. Not to be outdone, Nvidia released its Spectrum-X Ethernet platform last year, a move that allows the company to continue growing InfiniBand and is also gaining ground in the Ethernet market.

In the most recent quarter, Nvidia Ethernet for AI revenue doubled from the previous quarter as “hundreds of customers” signed up for the company’s Ethernet offerings. In fact, Spectrum-X is set to become a multi-billion dollar product line after just one year on the market. And since the company aims to launch new Spectrum-X products every year, there’s reason to be optimistic about future growth.

2. Nvidia is the leader in sovereign AI

Sovereign AI refers to a country’s ability to generate AI through its own infrastructure and resources — it’s especially valuable because it means a nation can preserve and capitalize on the strengths of its culture, traditions, language, and more.

This new area accounted for zero revenue for Nvidia last year, but this year it’s already on track to deliver billions in low double-digit revenue. Examples of Nvidia’s work in the area include projects to build supercomputers with Japan and Italy — and even a project with a French company to build Europe’s largest supercomputer.

Nvidia talked about the importance of sovereign AI at the start of the move, and it’s clear that the opportunity could bring in major revenue as different nations launch projects — and turn to Nvidia for help.

3. Nvidia is a key player in the development of autonomous vehicles

When Nvidia announced the upcoming release of its new Blackwell architecture and chip, adze CEO Elon Musk’s comment illustrated the chip designer’s importance to his industry: “There is nothing better than Nvidia hardware for AI right now,” Musk said. Over, Oracle Co-founder Larry Ellison recently said he and Musk begged Nvidia for more chips during a meeting with CEO Jensen Huang — Nvidia said demand for its GPUs outstripped supply.

The automotive industry was a big driver of growth for Nvidia last quarter, as every developer of self-driving technology uses Nvidia products. The company predicts that the industry will result in “multi-trillion dollars” in revenue, and that revenue will grow as more computing is needed for next-generation vehicles.

4. AI could transform healthcare, with help from Nvidia

Artificial intelligence can revolutionize many fields, but Nvidia’s Huang predicts that the technology will leave its biggest mark on healthcare. At the company’s GTC conference earlier this year, Huang pointed out that Nvidia is already present in various specialties — from imaging to gene sequencing and robotics.

At the conference, Huang announced the launch of about two dozen new services, spanning the fields of imaging, speech recognition and drug discovery. And in its recent earnings report, Nvidia said healthcare is “on track” to become a billion-dollar business for the company.

All these elements show us that Nvidia’s revenue growth has a long way to go. And each of these areas represents a long-term opportunity, meaning we’re not just talking about a quarter or two of revenue growth, but growth that could persist over time. And that’s why these are four fantastic billion-dollar reasons to buy Nvidia stock today.