NVDA (NASDAQ:NVDA) is one of the world’s most valuable companies. My Nvidia stock analysis reveals that as well as it’s doing, this company still has plenty of room to grow.
This past year has truly been transformative for Nvidia, with the stock skyrocketing more than 200%. Growth will continue as accelerated computing and generative AI drive momentum in the cloud. Nvidia stays ahead of their competition in the industry. In the long term, according to my Nvidia stock analysis, it’s still a bargain when considering the market opportunities in artificial intelligence.
Surging AI Chip Demand Will Continue in 2024
Last year was certainly the year of artificial intelligence, and this year will be no different.
For instance, Taiwan Semiconductor (NYSE:TSM) forecasted 20% revenue growth in FY24. They believe that artificial intelligence will boost chip demand with inventories returning to a healthy level.
Demand for AI chips will accelerate at an unprecedented rate over the next decade. In the 2024 fiscal year, Advanced Micro Devices expects the market will grow to more than $400 billion by 2027.
This is great news for Nvidia, and could translate into significant revenue and EPS growth in the 2025 fiscal year. Nvidia’s China-focused H20 AI chip could be another major tailwind for growth.
The chip maker is expected to flood the market in Q2 2024, after tightening U.S. export restrictions for semiconductor chips from the Biden Administration.
Market Share and Competition
The AI chip market is growing at a rapid pace, and Nvidia continues to hold a majority of the market share.
Wall Street analysts have warned about the coming AI chip competition for Nvidia. The most obvious contender, AMD is developing a new series of MI300X AI chips.
However, AMD has yet to penetrate the market and the stock has already gone parabolic, despite guiding just $2 billion in sales in 2024. That pales compared to Nvidia’s H100 GPUs which currently hold between 80-95% market share.
In Nvidia’s latest quarterly results, their data center revenue swelled 279% YOY to $14.51 billion. Nvidia is guiding $20 billion in sales in Q4 FY24, implying more than 200% growth from the year prior. The company will release their H200 GPUs in the second quarter of next year.
Right now, competition is scarce and Nvidia market share dominance is likely to continue. This makes them an obvious winner, as AMD executives estimate the market to grow to nearly $400 billion by 2027.
My Nvidia Stock Analysis Conclusion
NVDA stock looks overextended from a technical perspective. It is normal to be skeptical about initiating a position when you consider how parabolic the stock has gone.
However, it would be naive to believe that Nvidia could not double again from current prices. But that doesn’t mean right now is the ideal time for you to buy.
NVDA stock is currently trading at 35 times sales, and its P/E ratio of 83 indicates that the stock is relatively expensive. Prudent investors will keep their eyes peeled and be patient, waiting for dip buying opportunities as they present themselves in 2024.
On the date of publication, Terel Miles 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.
