It seems Nvidia(NASDAQ: NVDA) is a victim of its own success. After another incredible quarter in which it doubled its earnings per share (EPS) year over year, the chipmaker’s stock sank in the days following its Q3 numbers release. The fact is, expectations could hardly be higher. It’s a good thing the company appears to be still firing on all cylinders.
This isn’t the first time it’s been in this situation, and it’s likely not the last. Nvidia saw its stock retreat nearly 20% in the weeks following its last release, only to gain nearly 35% from that low. There is good reason to remain optimistic, as the next year is full of major catalysts for the company.
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On Tuesday, Dec. 3, Nvidia joined other leading Artificial Intelligence (AI) firms to discuss the future of the industry with the investment community. The annual UBS Global Technology and AI Conference presents a chance for Nvidia to show continued leadership and make the case for why it has so much further to go. The event marries the technical with the practical, shedding light on just how impactful AI can be in creating real-world value.
While one event is unlikely to move the needle, every chance the company — and the industry, for that matter — has a chance to make its case count. Here are three reasons why Nvidia is a buy as the event gets underway.
Look, this is hardly news, but it bears repeating: the AI market is huge, growing rapidly, and there’s ample reason to believe this will continue. PwC — one of the “big four” accounting firms — believes AI can add $15.7 trillion to the global economy by 2030. Statista predicts a compound annual growth rate (CAGR) for the total AI market of 28.3% through 2030.
It’s not just the analysts and talking heads that think so; CEOs from around Silicon Valley reiterated their commitment to AI and, more to the point, to spending billions of dollars on AI infrastructure. In Meta‘s last earnings call, CEO Mark Zuckerberg stated that despite record capital expenditures, his company “should invest more” because AI will “accelerate [Meta’s] core business” and “should have strong ROI over the next few years.
That is great news for Nvidia. The company’s chips supply the vast majority of the industry, and this market dominance is expected to continue in the foreseeable future. At this point, not even AMD can offer a chip that matches the performance of Nvidia’s flagship chips. While this lead will likely shrink as time passes, it’s doubtful Nvidia’s would be leapfrogged. Nvidia has enormous resources — in capital and talent — it can use to defend its pole position.
Blackwell, Nvidia’s newest line of Superchips, releases this month, and samples are already in the hands of many of its major clients. The chips are incredibly powerful, more than twice as powerful as its current Hopper chips, and demand for them is at a fever pitch. CEO Jensen Huang described the demand as “staggering” and reports have indicated the company has been sold out of them for a full year.
This is a big moment for Nvidia, and Wall Street is keen to see the company deliver a successful launch. If there are hiccups expected, Nvidia’s executive team certainly didn’t share them in its Q3 earnings call. The team painted a rosy picture of the next year and Blackwell’s roll-out, expecting more Blackwells to ship than previously expected. I think there is a good chance that revenue from Blackwell will be even larger than Wall Street expects, but we will learn much more in the coming months.
The term has been thrown around a lot recently, but a big focus of Nvidia’s call, apart from the launch of Blackwell, was the development and adoption of agentic AI — essentially AI that can actually do, not just create. Jensen Huang likes to think of them as “AI coworkers” that can “assist employees in performing their jobs faster and better.”
I think that agentic AI if done well, is where the real value of AI lies. This is where true efficiencies can be made throughout organizations of all types. One of the ongoing questions in the market as a whole is whether AI can deliver value that justifies the enormous costs involved. If it can, this is where we will see it.
Nvidia is ahead of this trend, offering “an operating platform of agentic AI,” as Huang puts it, insisting that industry leaders are already using it to build “copilots” — an industry term for AI helpers and agents.
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Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Meta Platforms, and Nvidia. The Motley Fool has a disclosure policy.
