Don’t Count Nvidia Out Just Yet
Nvidia’s (NASDAQ: NVDA) remarkable 243% surge in stock price over the past year and 543% increase over the last three years may lead investors to believe they’ve missed the boat. However, instead of dwelling on what could have been, let’s focus on the potential for future growth.
A Diversified Business with Room to Grow
Nvidia is often associated with artificial intelligence (AI), but the company has a more extensive portfolio, comprising four business segments. Each segment demonstrated sequential quarterly revenue growth and year-over-year increases in the latest quarterly period. The data center segment, which supports the growing demand for advanced AI computer chips, is experiencing the fastest growth.
A Trillion-Dollar Opportunity
In February, Nvidia CEO Jensen Huang predicted that the installed base of data centers would reach $2 trillion over the next four to five years, up from the current $1 trillion. With a market cap of approximately $3.4 trillion, Nvidia is well-positioned to capitalize on this trend. If Huang’s prediction materializes, it could translate to significant additional sales for the AI leader.
Evidence of Growth
Microsoft’s recent 10-K annual report revealed a substantial increase in its spending on data centers. The company reported $108.4 billion in financial lease commitments for data centers over the next five years, representing a nearly $100 billion increase from just two years ago. These leases will run for up to 20 years, providing a stable source of revenue for Nvidia.
More Than Just Data Centers
While the data center segment presents a compelling opportunity, Nvidia’s other businesses, such as automotive and robotics, also hold promise. As progress is made on self-driving cars and businesses seek more automation, these segments could experience significant growth.
It’s Not Too Late to Invest
Despite Nvidia’s impressive performance, there is still time to invest. The company’s diversified business and significant growth potential make it an attractive opportunity for those looking to capitalize on the AI trend. Don’t let fear of missing out hold you back – consider investing in Nvidia today.
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