Nvidia (NASDAQ:NVDA) is a leading producer of powerful GPU chips that are crucial for the development of advanced technologies. The recent surge in artificial intelligence interest has caused an increased need for incredible computing power, causing NVDA stock to skyrocket. The 187% YTD growth is nothing to scoff at, particularly for a company of Nvidia’s size.
This has proven that Nvidia is a stock worth owning, rather than trading. Given its rather long, momentum-driven moves, this stock has likely made a few traders plenty of money. However, it’s also a stock that’s proven to be worth buying on pullbacks. Long-term investors who simply bought NVDA stock on every 10%+ pullback have likely done better than the vast majority of traders in this name.
Thus, while I do think some near-term downside could be on the horizon for Nvidia (its valuation is enough to make most investors dizzy), I also think this is a stock that’s likely to retain its status as one worth holding for the long-term.
Investors may want to be patient with NVDA stock, but consider buying on future pullbacks, even if the stock appears to be expensive in its current state. Let’s discuss why.
U.S Chip Ban Isn’t That Scary for Investors
Headline-driven selling is something that happens with any stock. Nvidia was obviously hit by the news that the U.S. would be restricting the export of AI chips to China. After all, China remains a massive market for Nvidia, and the ongoing geopolitical tension between the U.S. and China is one of the only major overhangs for this stock.
That said, I think investors may want to wait for the dust to settle before panic selling.
These trade restrictions between the U.S. and China are typically temporary. Nvidia remains a dominant AI chip provider in China with over 90% market share. Thus, so long as AI demand continues to grow globally, Nvidia should have plenty of runway to grow while these geopolitical issues get hammered out. Nvidia can’t currently meet existing demand, so I’m not worried about this ban at the moment.
Nvidia Is Strong in Generative AI
Over nearly a decade, the Nvidia Jetson platform gained broad adoption in various industries. Generative AI’s impact extends beyond text and language to computer vision. This benefits autonomous machines and robotics, offering faster development and greater accuracy than traditional methods.
Nvidia has harnessed the capabilities of generative AI for recognizing and interacting with untrained elements. This extends to video search, asset tracking and edge computing, advancing, advancing computer vision. The company’s Jetson Generative AI Lab empowers developers to use open-source generative AI models for edge computing. This new software enables edge-based generative AI, making an easy start for Jetson developers.
Thus, for those bullish on Nvidia’s position in the AI race, this is a key catalyst to watch.
Arm-Based PC Chips by Nvidia
Nvidia is partnering with Arm Holdings (NASDAQ:ARM) to expand into CPU design for Microsoft (NASDAQ:MSFT) Windows. This move is seen as a challenge to Apple (NASDAQ:AAPL), which gained market share with its in-house Arm-based chips for Macs.
Nvidia also intends to manufacture PC-chips with Advanced Micro Devices (NASDAQ:AMD) potentially releasing them as early as 2025. Arm-based laptop chip maker Qualcomm (NASDAQ:QCOM) will also unveil more information about its flagship chip designed by former Apple engineers.
Where Is NVDA Stock Headed from Here?
AI technology offers significant potential for productivity and efficiency gains. As new AI applications continue to emerge, demand for AI chips, like Nvidia’s, remains high. While competitors like AMD and Intel (NASDAQ:INTC) enter the AI chip market, Nvidia’s strong position should mitigate their impact.
Beyond AI, Nvidia has non-AI catalysts, including a rebound in gaming chip demand and the potential to challenge Intel in the PC chip space. Given these factors, NVDA stock presents an appealing long-term investment opportunity, despite its currently pricey valuation.
On the date of publication, Chris MacDonald has a LONG position in AAPL The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
