Why Nvidia Stock May Have Peaked And What Investors Can Learn From Zoom

Nvidia’s advanced chips can use and process the massive amounts needed to train generative AI programs, such as ChatGPT and Gemini. Since Nvidia dominated this market before the increasing need for AI, Nvidia only grew larger as demand soared. Even with the daily ups and downs of the stock market, investors are taking notice of this growth and wondering how much the AI demand may drive the tech market in 2024. Generative AI is one of the main drivers of its rebound, and the stock market is showing signs of this rebound. The Nasdaq index is heavy in tech stocks and finished 2023 up 43%. The rise of generative AI led to a tech bull market, which is a time of expansion in the stock exchange.

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The miners exacerbated the oversupply problem by unloading their now-unwanted GPUs into the secondary market. By late 2020, it was apparent that a global semiconductor shortage was underway. This was creating major, escalating disruptions for consumers and for many global technology, auto, and consumer electronics companies that use chips in the products they make and sell.

Sales & Book Value

The company earned $60.9 billion for its full-year revenue, which was up 126%. 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.

NVIDIA – 25 Year Stock Price History NVDA

Miners once depended solely on central processing units (CPUs) to solve these problems, but CPUs’ central role has been eclipsed by the faster and more efficient GPUs. In a conference call with analysts, CEO Jensen Huang said that he felt very good about the company’s supply situation, despite the chip shortage. While soaring chip demand is driving NVIDIA’s record financial results, the company still has been concerned about possible shortages because it’s a “fabless company” (see the FAQs section below). Instead, it designs chips and outsources the manufacturing to third-party companies to do the fabrication.

In the years since, hardware makers have made serious advancements in processing power, enabling increasingly powerful machine learning applications. Let’s walk through the relevant details to answer that question, including the current state of AI stocks, key NVDA metrics and longer-term expectations for the company. Even Japan’s Nikkei stock market – held back for decades by low growth while the country coped with an ageing population – joined New York’s S&P 500 and German DAX indexes in reaching a record high. NVIDIA’s stock is owned by a variety of institutional and retail investors. NVIDIA issued an update on its first quarter 2025 earnings guidance on Wednesday, February, 21st.

Analysts largely expect the strong quarter-over-quarter growth to continue throughout the year. Comparisons will get tougher after the first quarter, but the consensus expectation is 73% sales growth for fiscal year 2025. In fiscal year 2026, analysts expect sales growth to slow to 21%. Investors today may have missed Nvidia’s early AI gains, but the broader AI segment continues to be an interesting investment opportunity. That will be the case as long as enterprise adoption of AI tech remains strong.

Now he has 84 shares left, worth over $65,000 based on Monday’s prices, in addition to other stocks. Given Nvidia’s rising profits, the company has achieved an enviable level of financial flexibility over the competition. It has been aggressively investing in other areas within the AI landscape including robotics and enterprise software. But savvy investors understand that this level of growth isn’t sustainable in the long run. Existing competitors in the chip space include Intel and Advanced Micro Devices — both of which stand to benefit from the secular themes fueling the overall accelerated computing market. Nvidia is central to the AI revolution, to the point of being almost immune to competition for now.

The company also has more than 50 offices throughout the world. © 2024 Market data provided is at least 10-minutes delayed and hosted by Barchart Solutions. Information is provided ‘as-is’ and solely for informational purposes, not for trading purposes or advice, and is delayed. To see all exchange delays and terms of use please see Barchart’s disclaimer. Upgrade to MarketBeat All Access to add more stocks to your watchlist.

1. The FTC said that the combination of the two chip companies would give NVIDIA unlawful control over technology that rival firms need to develop competing products.
2. Nvidia’s gaming GPUs, such as GeForce RTX 4070, help power video games at a higher resolution and quicker speed.
3. Despite competitive challenges, with its even-more advanced H2000 AI chips expected in 2024, Nvidia will maintain its hold on “more than 85% of the market for generative-AI chips next year,” according to the Journal.
4. This revenue was up 22% from the third quarter and up 265% from one year prior.
5. Nvidia’s advanced chips can use and process the massive amounts needed to train generative AI programs, such as ChatGPT and Gemini.

The company issued revenue guidance of $23.5 billion-$24.5 billion, compared to the consensus revenue estimate of $22.2 billion. The newly minted shares were issued to shareholders after the market closes on Tuesday, July 20th 2021. An investor that had 100 shares of stock prior to the split would have 400 shares after the split. NVIDIA launched its first product in 1995 called the NV1 and paved the way for 3-D games like Sega’s Virtual Fighter. The next big break came in 1996 with the launch of Microsoft DirectX Drivers which changed how Windows interfaced with games.

Supercomputing technology is used by companies, such as Meta for its AI Research SuperCluster computer, to train complex AI models. Tesla is also starting to build an AI-focused supercomputer for its vehicles. Each of Nvidia’s earnings reports exceeded expectations throughout 2023 as AI started gaining momentum and attention.

“I’m not even much of a techie. I’m not a computer person at all, but I knew that the GPUs would be worth something one day.” Believe it or not, there are several companies developing humanoid robots. Tesla’s Optimus bot and Boston Dynamics are probably the best-known examples of this technology.

This comes after SK Hynix posted net losses for five consecutive quarters from a slump in the memory chip market. Nvidia stock price hit a then all time high of over $23 in January 2002 but Nvidia stock price dropped dramatically back https://broker-review.org/fxtm/ down to single figures in the same year. Downs said his lifestyle wasn’t lavish but that he tried to travel every month. Places he’s been to include Bolivia, Paris, and Mexico City, and he plans to go to Spain at the end of April.

The reasons for the shortage, which is continuing, are numerous. Federal Trade Commission (FTC) sued to block the acquisition due to antitrust concerns after a unanimous vote by commission members. The FTC said that the combination of the two chip companies would give NVIDIA unlawful control https://broker-review.org/ over technology that rival firms need to develop competing products. The commission also said that the combination would create the potential for a stifling of innovation in next-generation technologies, such as technologies used to power data centers and driver-assistance systems in cars.

The company was the fastest every semiconductor company to reach $1 billion in revenue. The investors Business Insider spoke with piled into Nvidia early on because of its renown among PC gamers, but today, the company’s chips are the lynchpin of the AI revolution — and there is virtually zero competition. The stock’s steep climb — up over 1,500% since 2019 — has transformed the lives of some of Nvidia’s long-term retail investors, resulting in comfier retirements, new cars, and gains worth millions for some. Among this exclusive club, Nvidia might just be the most important. The company specializes in high-performance graphics processing units (GPUs) that are used for a variety of applications across the generative AI spectrum. If the GPU designer can do a better job than Zoom did at creating a fast-growing future after the current generative AI demand boom slows down, investors may continue to benefit from owning Nvidia stock.

For context, an iShares survey concludes that 70% of business executives will increase their AI spending in 2024. The opportunity in AI goes well beyond chatbots that can write essays and create videos. Enterprise organizations are increasingly exploring the use of AI for cost efficiency, data-driven decision-making, automation of repetitive tasks and product and service improvements. Those applications require specialized hardware and software, such as high-powered processors, memory chips, solid-state drives and robust AI development platforms. Even without a global downturn, stock market investors may panic if they believe financial assets have become overpriced.

NVIDIA could thus still be affected by the shortage if its third-party suppliers cannot manufacture chips fast enough to meet soaring demand. 42 Wall Street research analysts have issued “buy,” “hold,” and “sell” ratings for NVIDIA in the last year. There are currently 3 hold ratings, 38 buy ratings and 1 strong buy rating for the stock. The consensus among Wall Street research analysts is that investors should “moderate buy” NVDA shares.

Since then, Zoom stock has lost 89% of its value and its revenue growth has slowed to 3%. Longer term, Nvidia is likely to remain at the forefront of computing even as competition ramps up in AI. The company has historically excelled at identifying trends early, innovating solutions and leveraging a first-mover advantage. Through that cycle, NVDA created GPU demand in the early 2000s and, now, practically owns the AI chip market. Outside of any big leadership or strategy changes, whatever’s next for processors, Nvidia should be involved.

In January of that same year, NVIDIA went public through an initial public offering (IPO). Today, the company’s GPUs power many of the world’s fastest supercomputers. The company is scheduled to release its next quarterly earnings axitrader review announcement on Wednesday, May 22nd 2024. 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.

Forbes’ expert analysts have pinpointed the 12 superstars poised to ignite returns in 2024. Don’t miss out—download 12 Best Stocks To Buy For 2024 and claim your front-row seat to the coming boom. Sixty percent of respondents from the iShares survey cited cost savings as their primary goal for AI. As businesses realize AI-related cost savings, competitors will likely follow suit. That, in turn, should fuel ongoing demand for the hardware and software inputs that enable AI development.

Founded in 1993, The Motley Fool is a financial services company dedicated to making the world smarter, happier, and richer. The Motley Fool reaches millions of people every month through our premium investing solutions, free guidance and market analysis on Fool.com, top-rated podcasts, and non-profit The Motley Fool Foundation. The general rule of stock market investing is to buy shares in companies you think will exceed investor expectations and raise guidance. Still, the stock’s high price tag is a risk, as is buying a stock that’s trending after a surprisingly positive earnings report. And, the AI landscape will evolve and mature, which should create opportunities for other players. For those reasons, investors looking to capitalize on AI stocks today may want to look beyond Nvidia.

I think the company’s growth story is just beginning, and see now as a terrific opportunity to scoop up some shares and hold for the long run. But at the end of the day, investors should be wondering why Nvidia’s valuation has soared relative to its peers. The themes explored above showcase that, for now, Nvidia is the undisputed leader in the AI chip space. And while competition will likely come at some point, Nvidia is already hedging its bets — looking to expand beyond GPUs and data center services.

The GPU will not only enhance the graphics capabilities of the PC but lead to accelerated-computing and AI as well. One of Nvidia’s biggest customers, Meta Platforms, raises its projected investment in artificial intelligence but highlights the role of its in-house chips. The Google parent posted earnings ahead of expectations, helped in part by AI-driven demand for cloud computing. According to 43 analysts, the average rating for NVDA stock is “Strong Buy.” The 12-month stock price forecast is $916.76, which is an increase of 4.49% from the latest price. The company’s dominance has made it hard to find anyone willing to give the bear case, though some analysts have recently sounded more hesitant about further gains after the stock’s meteoric rally.

It posted revenues of $22.1bn – against expectations of $20.6bn – and then forecast revenue growth of 233% in the current quarter, ahead of Wall Street forecasts of 208%. The 2017 boom in cryptocurrency sent the prices of GPUs skyrocketing. 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.