The chipmaker NVIDIA Corporation (NASDAQ: NVDA) has been rallying for the last three years as its share price almost tripled during the period. The corporation has been reporting robust double-digit growth by effectively positioning itself in the gaming industry, artificial intelligence space, datacenter market, as well as automotive sector. Because of these efforts, the company managed to boost its stock by over 40 times earnings.
During the past 4 quarters, NVIDIA’s growth accelerated. The chip manufacturer’s revenue guidance stood at $1.68 billion plus or minus two percent for the Q3—a more than 20 percent growth. With this, it is apparent that the company is anticipating that the bullish momentum will resume.
One of the reasons the stock is climbing is that it is already the leading player in the gaming industry as it has revenues amounting to over $781 million from this sector in the Q2. At present, the segment is growing at a healthy rate for NVIDIA and has a strong potential to move to the upside in the medium term because almost 50 percent of the revenues come from a constant growth segment.
Aside from that, the company’s growth rate came in above 20 percent in the past few quarters due to NVIDIA’s initiatives in the auto and datacenter industry. These two segments are experiencing advantages because of the company’s leading position in the AI and Deep Learning landscape. As more companies penetrate the cloud market, the products of NVIDIA will become more in demand.
Currently, the chipmaker is pushing its products into the cloud divisions of huge companies, such as IBM Watson and Facebook’s Big Sur. Apart from that, the firm is also collaborating with Amazon on the SpaceNet program, Microsoft, Baidu on its autonomous car initiative, and Alibaba among others.
Currently, NVIDIA is collaborating with almost 80 firms in the driverless car market, helping them develop their own solutions through the DRIVE PX open architecture.
Investors of NVIDIA are fully aware that the chip manufacturer has the capability to report record quarterly results for an extended period of time. Occasional stock declines offer good buying opportunities, but even if the upside potential of the company is rock-solid, we recommend that you add to your position one step at a time.
For those who are considering to make it a long-term investment, we advise market participants to invest small amounts over the next half a decade. By that time, the cloud sector and technologies behind the automotive industry would have become more stable. Hence, NVIDIA will also be coming in with a more stable pace of growth.
As of 9:58 AM GMT -4 on October 5, the NVDA stock is changing hands at $68.92, up by 0.91 percent or 0.62 points.