Nvidia (NASDAQ: NVDA ) jumped again on Tuesday, adding to his ongoing winning streak this year. The stock rallied throughout the trading day and by the time the market closed, the stock was up 7.2%.
The broader market was decidedly mixed today, looking for direction, but the catalyst that helped send the chipmaker higher was strong quarterly results. Oracle (NYSE: ORCL). The company cited strong demand for AI-centric cloud services with demand outstripping supply. Oracle also cited a recent cloud infrastructure deal with Nvidia and hinted at more to come, saying “we expect to make some very good joint announcements with Nvidia next week,” at the company’s GPU Technology Conference (GTC). , which starts on Monday.
Is Nvidia stock still a buy?
The announcement adds to a growing mountain of evidence that demand for generative AI is just getting started. Nvidia has taken the pole position by providing graphics processing units (GPUs) equipped to handle the rigors of AI processing. Moreover, competitors have been unable to come up with a better solution, allowing Nvidia to dominate the field — in two ways.
First, Nvidia is the largest supplier of GPUs used in data centers, accounting for 98 percent of the market. Wells Fargo Analysts Since the majority of AI computing is done in the cloud and data centers, this benefits Nvidia. Second, the company is also going for processors used in machine learning — an older branch of AI — which also controls 95% of that market share. This gives Nvidia a strong position, a clear advantage over challengers.
As a result, Nvidia has delivered three consecutive quarters of record-setting growth, highlighted by triple-digit, year-over-year revenue and profit growth, with another quarterly tap.
This leads to an important investment question: Is Nvidia stock a buy? Following the company’s recent blockbuster earnings, Nvidia’s valuation has fallen significantly, currently trading for 36 times forward earnings. While this is a premium compared to the price-to-earnings (P/E) ratio of 28. S&P 500Nvidia’s track record of blockbuster growth makes it clear that it deserves a premium.
It looks like the demand for AI will continue, with Nvidia sitting on the tollgate. As a result, the company and investors will benefit.
Should you invest $1,000 in Nvidia right now?
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Danny Vena has positions in Nvidia. The Motley Fool has positions and recommends Nvidia and Oracle. The Motley Fool has a Disclosure Policy.
Nvidia stock rallied (again) today. Is it too late to buy red-hot artificial intelligence (AI) growth stocks? Originally published by The Motley Fool.