Amidst surging global demand for microchips and semiconductors, Nvidia (NASDAQ:NVDA), with a more than threefold increase in share price since January 2023 and a five-year gain exceeding 1,000%, remains a compelling growth investment. This has a persuasive implication for holding NVDA stock.
The company reached a $1 trillion market cap this year, signaling substantial potential for future growth. Analysts project a 35% increase from current levels in the median price target, making Nvidia an attractive choice for investors.
In response to soaring global demand, Nvidia introduced the formidable “GH200 GPU,” surpassing the capabilities of its H100 chip with increased memory and an additional processor. The market has clearly shown significant interest in Nvidia’s slate of upcoming chips, projecting continued sales and profit growth into 2024 and beyond.
RTX 4090 Hoards
The Nvidia RTX 4090 is a leading consumer graphics card that excels at gaming and AI work. However, its prices surged after being placed on U.S. export controls, with scalpers and profiteers driving increased demand.
Nvidia doesn’t disclose specific unit sales for GPUs, but high-end models like the RTX 4090 have a smaller gamer user base than mainstream options. The recent Steam Hardware Survey shows only 0.62% of RTX 4090 users. Similar to the 2020–2021 shortages, increased demand for such high-end GPUs may take months for supply to catch up. The RTX 40-series has been selling at or slightly below MSRPs for the past year, but the recent surge in RTX 4090 prices suggests a shift.
Consumer GPUs, including the RTX 4090, 3090, and 3080, have been repurposed for AI and data centers, with modifications like blower-style coolers and increased VRAM on the RTX 3080. The 30-series likely consists mostly of used mining GPUs, while assembling RTX 4090 cards from major partners in China is restricted, impacting prices. Speculations about an RTX 4090 Ti or Super circulate, but being officially banned doesn’t eliminate other entry points into the Chinese market.
Nvidia Chips in Singapore
NVDA stock’s impressive Q3 results revealed that approximately $2.7 billion, or 15% of its revenue, originated from Singapore. This marked a substantial 404.1% increase compared to the same quarter the previous year, outpacing Nvidia’s overall revenue growth of 205.5%.
In Nvidia’s Q3 sales rankings, Singapore ranked fourth, following the U.S., Taiwan, and China, including Hong Kong. Analysts attribute this to data centers and cloud service providers in Singapore. Maybank Securities analyst Jarick Seet suggested that chips might be sent to Singapore for final assembly with other products or used for various purposes like artificial intelligence, computing, and electric vehicles.
NVDA Surges Amid OpenAI CEO Headlines
Following his departure from OpenAI, Sam Altman has reportedly joined Microsoft (NASDAQ:MSFT). This news coincides with a surge in Microsoft’s stock to an all-time high of $378.81. Nvidia has also benefited, reaching a record high of roughly $500 per share amid the AI sector’s growth.
Microsoft experienced a late November stock surge, which experts linked to the hiring of Sam Altman. Altman’s unexpected departure from OpenAI on Nov. 17 led to interim CEOs before Emmett Shear took over.
Altman and OpenAI co-founder Greg Brockman took charge of a new AI division at Microsoft, a surprising move given Microsoft’s $13 billion investment in OpenAI. This news contributed to Microsoft’s stock surge, aligning with the sector’s strong performance in 2023. Other AI stocks, like IBM and Tencent, also reached notable highs.
Bottom Line
Given the company’s high valuation and the uncertain outlook for the overall global economy, more volatility is likely to remain on the horizon for NVDA stock investors. However, until these AI-related tailwinds stop bolstering the company’s top-and-bottom-line growth trajectories, NVDA stock remains a difficult option to bet against.
Investors taking the long-term view on the chips sector have to consider having some exposure to this leader, whether they like it or not. This inherent demand will likely remain a driver of the stock in bull markets, so for those betting the good times will continue, Nvidia remains a stock to own right now.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
