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NVIDIA generated a net income of $4.3 billion on $16.7 of revenue in its 2021 fiscal year (FY), which ended Jan. 31, 2021. Though there are dozens of publicly traded companies that can benefit from the AI revolution, none has been a hotter commodity for investors than semiconductor stock Nvidia (NVDA -0.17%). NVIDIA declared a quarterly dividend on Tuesday, November 21st.

It’s a leader in making semiconductors for AI, which is becoming a major growth driver for the company. Explore opportunities for investing in Databricks, and the ins and outs of this tech company. We’d like to share more about how we work and what drives our inside bar trading strategy day-to-day business. Reuters recently reported that Nvidia is building a custom chip design unit that might help build specialized AI chips for others. We’ll be interested in any insight around this initiative, and the opportunities it might open for Nvidia.

1. The cash flow gave it the funds to invest in continued innovation while returning money to shareholders through dividends and share repurchases.
2. AI involves using software and systems to oversee tasks that would generally be handled by humans.
3. Meanwhile, we don’t foresee any companies becoming a third relevant player in the GPU market.
4. Although revenue is undoubtedly headed higher, we’ve likely seen a peak in the company’s gross margin.

Click the link below and we’ll send you MarketBeat’s list of seven best retirement stocks and why they should be in your portfolio. Founders Jensen Huang and Chris Malachowsky are still in leadership positions. Mr. Huang has served as the company’s CEO, president, and board member since the company’s founding. Mr. Malachowsky serves as a member of the company’s executive staff and is a senior technology executive. Nvidia is scheduled to report its quarterly results on Feb. 21. However, I would be shocked if that growth rate continues for, say, the next five years.

Nvidia is now worth more than Amazon thanks to the AI chip boom

While prices hit a speed bump in its 2023 fiscal year, they’ve already started to reaccelerate. The company’s investments in accelerated computing position it to capitalize on the enormous potential of AI, which could reignite its earnings and stock price, making Nvidia a great long-term investment. Even if its name is somewhat unfamiliar, chances are you’ve used NVIDIA’s products in a gaming console or a personal computer. Today, NVIDIA dominates the market for graphics processing units, and in the future it’s products could form the backbone of artificial intelligence (AI) computing applications like self-driving cars. Nvidia has had a long history of innovation since developing the GPU.

Graphics cards that would normally sell for $800 were being resold for as much as $2,000 as miners represented a whole new source of demand in addition to gamers. NVIDIA said in an earnings call with analysts in 2018 that inventory for its graphics cards was at a record low, partly due to strong demand coming from the cryptocurrency market. But when that market cooled off in 2018, NVIDIA was left with months’ worth of expensive inventory that it found hard to sell to price-conscious gamers. The miners exacerbated the oversupply problem by unloading their now-unwanted GPUs into the secondary market. Likewise, Intel (INTC -1.98%) plans to go head-to-head with Nvidia.

Nvidia’s Outstanding 2023 Third Quarter Fiscal Performance

To get the best possible experience please use the latest version of Chrome, Firefox, Safari, or Microsoft Edge to view this website. There are considerably smarter ways to take advantage of the AI revolution than buying or holding Nvidia stock. Last but not least, Nvidia is priced for perfection in an industry that’s full of unknowns. While many of these next-big-thing trends worked out well for select businesses over the long run, the short term can be bumpy. AI is unlikely to be an exception to what’s seemingly the rule.

The IBD 50 stock gapped up nearly 48% in enormous volume on Thursday, following the chip design firm’s beat on its fiscal third-quarter earnings and revenue estimates late Wednesday. Nvidia’s main products in 2002 were graphics cards for gaming PCs. But Nvidia shares are up over 246% in the last 12 months on robust demand for its server AI chips that can cost more than $20,000 each. Companies such as Microsoft, OpenAI and Meta need tens of thousands of them to run products such as ChatGPT and Copilot. Nvidia has completed six stock splits in its history, with the last split completed in 2021 (4-for-1) when shares were about $750. That price point and proximity to the last split suggest it might be a while before Nvidia splits its stock again.

Why these four ‘Magnificent Seven’ stocks are earnings-season winners

Shares of NVIDIA split before market open on Tuesday, July 20th 2021. The newly minted shares were distributed to shareholders after the closing bell on Tuesday, July 20th 2021. An investor that had 100 shares of stock prior to the split would have 400 shares after the split.

While revenue from the previous year was flat, income decreased sharply (55%) from its 2022 fiscal year. Weighing on income were higher costs — including increased spending on research and development — and lower sales of higher-margin products to the gaming and cryptocurrency mining markets. Fellow tech behemoth Microsoft (MSFT -2.15%) is investing billions of dollars into OpenAI to help take the technology to the next level, which should drive strong demand for Nvidia’s processors. That has certainly been the case in 2023 as its AI-related chip sales soared. That’s what happened to the video communications company Zoom back in October 2020 — months after it reported 355% revenue growth for its fiscal quarter ending in August of that year. Since then, Zoom stock has lost 89% of its value and its revenue growth has slowed to 3%.

In that case, go with an individual retirement account (IRA), which is like a personal 401(k). If you need to withdraw money in the account before you’re at least 59 ½, you may have to pay taxes and penalties. Another reason to steer clear of Nvidia or bid its stock adieu is that executives and board members have done nothing but sell their shares for more than three years. A fourth reason to sell shares of Nvidia is the increasing pressure the company is facing from U.S. regulators.

What makes AI such a game changer is machine learning, which allows these systems to “learn” over time and become more efficient at their tasks. AI has applications in virtually every sector and industry, which is likely why the researchers at PwC believe it can add up to $15.7 trillion to global gross domestic product by 2030. For the past three decades, there have been no shortages of next-big-thing investment trends to captivate the attention of Wall Street and investors.

These catalysts have enabled Nvidia’s profits to re-accelerate and could continue driving them higher. That number ballooned to over $7 billion in its fiscal third quarter of 2024 as it cashed in on AI-driven chip demand. The cash flow gave it the funds to invest in continued innovation while returning money to shareholders through dividends and share repurchases.

The company issued revenue guidance of $18.0 billion-$20.0 billion, compared to the consensus revenue estimate of $16.4 billion. 39 Wall Street research analysts have issued “buy,” “hold,” and “sell” ratings for NVIDIA in the last year. There are currently 1 sell rating, 3 hold ratings, 34 buy ratings and 1 strong buy rating for the stock.

Upgrade to MarketBeat All Access to add more stocks to your watchlist. 783 employees have rated NVIDIA Chief Executive Officer Jen-Hsun Huang on Glassdoor.com. Jen-Hsun Huang has an approval rating of 99% among the company’s employees. This puts Jen-Hsun Huang in the top 10% of approval ratings compared to other CEOs of publicly-traded companies.

For the fiscal third quarter ending October 2023, Zoom revenue grew a mere 3% to $1.14 billion while earnings increased to $1.09 a share. Zoom predicted $1.13 billion in revenue for the fiscal fourth quarter — meeting investor expectations, noted IBD
IBD
. The general rule of stock market investing is to buy shares in companies you think will exceed investor expectations https://g-markets.net/ and raise guidance. Buying individual shares of NVIDIA is only one way to benefit from its growth. You can also take a safer, more diversified approach by buying exposure to it through index funds and exchange-traded funds (ETFs). These funds let you buy into hundreds or thousands of companies at once, which decreases your overall risk of losing money on your investment.

The company believes accelerated computing can help unlock the power of AI. Nvidia’s GPUs power the AI software behind OpenAI’s wildly popular ChatGPT program. My guess is slowing growth contributed to the decline in Zoom stock from that peak. Indeed in November 2020, Zoom forecast 300% growth for its fiscal year 2021 to $2.5 billion — very high but a noticeable slowdown from the 355% growth the company enjoyed in FY quarter ending in July 2020. Zoom’s stock peaked at $559 in October 2020 — following a 355% surge in Zoom’s revenue for fiscal second quarter 2021 (ending in July 2020). Should Nvidia one day report slower than expected revenue and lowered guidance, its stock will almost surely plunge.