Now that summer is coming to an end, that means it’s time to pull out your sweater, grab a pumpkin spice latte, and reevaluate your tech stocks. This Yahoo Finance series will help you decide what to do with your stocks, including some of the biggest names in tech — Apple, Alphabet, Amazon, Microsoft, Meta, Nivea and Tesla. Amazing seven. First up is this year’s hottest tech stock, chipmaker Nvidia.
Nvidia stock ( NVDA ) has hit an all-time high, and its historic year isn’t over yet. But how far can the company’s AI-fueled mega-growth go?
It has risen more than 230% to date and since entering The trillion dollar club Alongside Microsoft ( MSFT ), Amazon ( AMZN ), Apple ( AAPL ) and Alphabet ( GOOGL , GOOG ), the company has become the name to beat in the AI boom. And it may have more room to run, said Steve Sosnick, chief strategist at Interactive Brokers.
“This stock more or less has a full investment theme,” Sosnik told Yahoo Finance. “AI as a concept is not new. ChatGPT is what made AI mainstream and brought it to the attention of many ordinary people. So as this gold rush begins, Nvidia is perfectly suited to the ‘pick and shovel’ style.”
Nivea competitor Moat
With its H100 chips powering OpenAI’s ChatGPT platform and other new technology applications, Nvidia is considered to boast a pivotal position in the AI space. The company has entered into high-profile generative AI chip deals with ServiceNow (NOW) and Snowflake (SNOW).
Stronger demand triggered a material upward reset that surprised the broader market in Nvidia’s guidance on May 24. Navia’s market value exploded to $184 billion as investors scrambled for a fast growth story.
Just a week ago, Nvidia surprised everyone with better-than-expected guidance and a new $25 billion stock buyback.
When it comes to those H100 AI chips, it’s not just hype, as Nvidia is in a class of its own — at least for now, says Raymond James analyst Srini Pajjuri.
“They’re the only game in town right now in AI processing,” he told Yahoo Finance. “Demand and supply will come into balance to some extent, but this is still a growing market.”
The company has a strong competitive position around the AI chip business, although it may erode over time. How much is the question? That will determine how much Nvidia’s price can rise over time, experts say.
The company’s foothold in the public cloud — the use of shared, public infrastructure for cloud resources — is particularly strong and supports Nvidia’s expectations.
“In the public cloud, it’s going to be very difficult to compete with them because of the ecosystem they’ve built,” Pajjuri said. “I’m not saying that the NVIDIA MOAT is as strong as the iPhone, but it’s the strongest when it comes to AI, and that’s especially true in the public cloud.”
However, the competition is coming down the pike, especially since Nvidia’s offerings are expensive and customers are inevitably looking for cheaper alternatives. Supply shortages are also a key issue on the road.
AMD has already moved to counter Nvidia. When they want to build their own AI chips, the competition can come from their own customers. And some of the biggest names in tech have been moving to make their own chips in recent years, including Amazon and Apple.
What should you do with Nvidia stock?
Obviously, Nvidia stock is very hot right now.
And a cooling in the stock is not imminent, experts who follow Nvidia told Yahoo Finance.
“We still like the story, demand is still very strong, and supply is limited,” Pajjuri said.
Looking ahead, experts believe there are significant gains in the AI space and strong EPS growth for Nvidia between two to three more quarters.
“I still believe fundamentals are important,” Sosnick said. “On the one hand, I can’t think of a company that is growing faster, but a lot of that growth is worth it.”
At the end of the day, Wall Street says buy the stock. According to Bloomberg, analyst recommendations currently come in at 56 Buys, Four Holds and Zero Sells.
Ali Garfinkle He is a senior tech reporter at Yahoo Finance. Follow her on Twitter @agarfinks And on LinkedIn.
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