This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.
Nvidia (NASDAQ: NVDA) has seen its earnings and share price soar over the past several years. This is as it built dominance in one of the world's most-watched hot technologies: artificial intelligence (AI). This tech player has become the leader in the area of AI chips, with its graphic processing units (GPUs) topping rivals in speed and general performance.
The company offers a variety of other AI services too -- even building tools specifically for certain sectors, such as healthcare or the automobile industry. All this has made Nvidia a household name in the world of AI.
Now, the questions investors often ask are: What will be Nvidia's next move? After the explosive growth of the past few years, will the pace now slow?
We may answer those questions thanks to a clue from the company itself. Nvidia recently made an unobtrusive -- and what may even seem ordinary maneuver -- but my prediction is it could signal a big growth move ahead. Let's take a look.
Nvidia's shares skyrocket
First, a quick look at what's happened so far. Nvidia surged onto the scene early in the AI boom with its GPUs, and they rapidly emerged as the tool needed to power this revolution. As a result, Nvidia's revenue, which had gradually increased since the company's launch in the early 1990s, skyrocketed over just the past few years.
NVDA Revenue (Annual) data by YCharts
Now here's what's really important: Not only has revenue taken off, but Nvidia also is very profitable on sales, with gross margin consistently topping 70% in recent quarters. (It dipped to 60% in the most recent quarter on a charge linked to export restrictions concerning the Chinese market, but excluding this charge, gross margin met its above-70% target.)
Nvidia hasn't reached this level of revenue by selling the same chip year after year -- the company has become an innovation powerhouse, updating its AI chips and/or architecture frequently, and as of its latest release, known as Blackwell, a few months ago, Nvidia says updates will come on an annual basis. It's already set out an agenda of annual releases through 2028.
On top of that, Nvidia has struck partnerships with major projects -- for instance, supplying chips to the Stargate project -- has landed contracts around the world, and is investing in manufacturing in the U.S. So, Nvidia is firing on all cylinders, and this should help it to benefit as today's multibillion-dollar AI market reaches into the trillions, as analysts predict, in the years to come.
A move that didn't attract attention
And Nvidia's unobtrusive action -- one that didn't attract much attention -- in recent times suggests a major growth move could be around the corner. Late last month, the company filed a mixed-shelf registration with regulators, allowing it to raise capital through equity or debt at any point during the coming three years. Nvidia currently has about 24 billion common shares and zero preferred shares outstanding; it's authorized 80 billion common shares and 2 million preferred shares, suggesting it has plenty of room to launch future sales.
The shelf registration allows Nvidia to quickly plan an offering during this time frame, making it easier to take advantage of favorable market conditions and get in on opportunities as they arise. That's clearly a positive point.
Readiness to invest
The second big positive is this move suggests Nvidia aims to invest in the near future -- this could be in a variety of areas, from research and development to factory expansion or even potential acquisitions. This readiness to invest implies growth opportunities lie ahead, and Nvidia, with this flexibility to quickly raise cash, is well positioned to benefit from them.
We've already seen evidence of Nvidia's focus on growth in recent times. For example, in April, the company announced investment in two U.S. factories for the eventual manufacturing of American-made supercomputers and says they should ramp up in 12 to 15 months.
So, why is all of this important for investors? As I mentioned, one big concern has been about Nvidia's growth moving forward. But considering Nvidia's leadership in a market with strong growth forecasts, there's reason to be optimistic about the future. And my prediction is Nvidia's decision to initiate a mixed-shelf registration signals the company is ready to make a big growth move -- one that could pay off for this tech giant and investors over the long term.
This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.
