Investors are keeping a watch on the Nasdaq Composite as we approach 2024 since past performance indicates that it will rise after bad market recoveries. Nvidia stock is one of the stocks that is attracting attention. This firm has already proven to be quite successful, especially with its incredible 239% growth the previous year.
The increasing use of artificial intelligence (AI) and Nvidia’s key position in the IT industry are the main drivers of the company’s growth. The latest developments in generative AI have been advantageous for Nvidia, whose GPUs are the industry benchmark. Thanks to their parallel processing capabilities, these GPUs not only provide lifelike pictures in video games but also provide essential computational capacity to enable AI systems.
It is anticipated that the growing AI market will play a significant role in driving Nvidia stock price higher. According to Bloomberg Intelligence, estimates indicate that the generative AI market will increase at a compound annual growth rate (CAGR) of 42%, from $40 billion in 2022 to an astounding $1.3 trillion by 2032.
Nvidia revealed record-breaking third-quarter revenue of $18.1 billion in its fiscal 2023, up 206% year over year and demonstrating the enormous potential in the AI space. With an estimate of $20 billion in revenue for the fiscal fourth quarter, a 230% year-over-year rise, the company’s continued growth remains healthy, even though the triple- and quadruple-digit gains may not be sustainable in the long run.
Beyond AI, Nvidia stock also dominates the data center and gaming industries. Being the industry leader in gaming GPUs, Nvidia is in a good position to profit from the anticipated expansion of the worldwide gaming graphics card market, which is anticipated to reach $15.7 billion by 2029.
Furthermore, Nvidia stock is a major player in these developing markets with a substantial market share (approximately 95%) in processors used for machine learning and data centers. According to industry research, the data center market is expected to increase at a compound annual growth rate (CAGR) of about 11%, from $263 billion in 2022 to $603 billion by 2030.
Even if there are still issues with Nvidia’s valuation, the company’s stock is undervalued since the price/earnings-to-growth (PEG) ratio is less than 1, which is a more appropriate measure for a business that is growing quickly. By contrast, the PEG ratio of the S&P 500 is greater than 2, highlighting the fair value of Nvidia.
Because of its leadership in the AI, gaming, and data center areas as well as its attractive price, Nvidia stock is clearly one to watch in 2024. With the Nasdaq still rising, Nvidia seems to be in a good position to benefit from the impending spike.