Should you buy Nvidia stock as its AI Summit kicks off? History says this will happen.

Leader in Artificial Intelligence (AI). Nvidia (NVDA 0.83%) is scheduled to host its AI 2024 summit starting October 7. The event will bring together leaders from across the industry to see and hear from some of the leading minds in AI. It’s a chance to glimpse the future of this potentially revolutionary technology.

With such a big event coming up, you might be wondering: Should I invest in Nvidia now? History can give us a clue. Let’s take a closer look at the company.

Nvidia dominates its rivals

There was a time when Nvidia and its longtime rival, Advanced microdeviceswere neck and neck in their battle to control the gambling market. Overall, there was parity between both of the company’s income statements. That has changed. After AI reached an inflection point at the end of 2022, Nvidia dominates AMD, earning more in profit than AMD in total revenue. Take a look at this chart, which shows just how monumental the recent change has been.

NVDA Revenue (TTM) data by YCharts.

That’s what you get when you control 90% of a market as valuable as AI silicon. The great news for Nvidia is that it doesn’t look like the gravy train is going to stop anytime soon. The message from the rest of the tech bigs, the companies that make up the bulk of its business, is that their spending could accelerate in the near future.

This is a race of sorts and none of the big players can afford to be left behind. That AlphabetIts CEO, Sundar Pichai, put it in the company’s last earnings call: “The risk of underinvesting is dramatically greater than the risk of overinvesting for us here.” Alphabet expects to spend about $50 billion in capital expenditures (capex) this year, up from $32 billion the previous year — and it’s not alone.

Currently, most of this spending still flows through Nvidia as AMD, Inteland others struggle to match the power and efficiency of Nvidia’s chips. There is still huge demand for its current generation, and the company’s next generation is likely to ship in the next few months. The massive profits Nvidia has enjoyed mean it has large sums to spend to maintain its advantage. Despite already leading the pack, Nvidia outspent AMD in R&D by roughly two to one last quarter.

What does history have to say?

This will be the third year in a row that Nvidia will host an AI event in this regard. The company kicked off these events in 2022 with a virtual event focused on speaking in AI. 2023 was supposed to be the first year of a full-fledged, multi-day AI summit, but the event was moved online for a single day. This year’s event will be held in person over three days.

Despite their more modest meeting formats, both previous iterations have resulted in a nice run-up in Nvidia’s stock price. In the week following the 2022 event, shares rose as much as 10%. In 2023, they increased by up to 6.5%. So will this year’s conference also lead to an increase in the share price? May be.

I know that might be a disappointing answer, but the truth is, we can’t know for sure. First, two years is a very small sample size from which to draw firm conclusions. Also, even though we had several reference years, correlation it is not CAUSALITY. Just because two things can be linked — like an AI summit and a stock price spike — doesn’t mean one is happening. because of the other.

But the event is a chance to remind us of the power that AI holds. Instead of thinking about possible short-term stock movements, focus on the company’s long-term prospects. Don’t lose sight of the forest for the trees. This is a company at the top of its game, enabling the adoption of a potentially revolutionary technology.