This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Nvidia (NASDAQ: NVDA) has been a focal point of investment in the artificial intelligence (AI) sector this year. It's the undisputed leader in accelerated computing. However, Nvidia's chips aren't the only reason why.

The company's graphics processing unit (GPU) stacks combine hardware, software, and platform solutions designed to support applications from gaming to professional visualization and accelerated computing. I believe Nvidia's vast array of solutions will reaccelerate growth in the stock price next year. 

AI solutions for the future

Nvidia's revenue soared to a record $57 billion in the recently reported fiscal third quarter. That was a remarkable 62% year-over-year jump.

Some investors believe that this kind of growth is unsustainable. That seems like a sensible position considering that level of sales. I predict that another leg of sustainable growth lies ahead that investors will begin to recognize in 2026. Nvidia CEO Jensen Huang has already publicly signaled what it will be, too.

Even if the AI data center buildout slows, as some believe will happen, Jensen Huang sees a long growth runway for his company over the next decade. In an interview earlier this year, Huang stated, "This is going to be the decade of AV [autonomous vehicles], robotics, autonomous machines."

Nvidia will supply both hardware and software to support that development. The company produces embedded systems for autonomous and robotic applications. Nvidia's Drive ADX platform provides high-level compute performance for the highest level of self-driving technology.

The company calls its Jetson platform "the ideal software for robotics and generative AI at the edge." It's powered by Nvidia's leading Blackwell GPU, helping to generate more hardware sales, too.

Investors should continue to monitor data center growth to track the state of Nvidia's business. However, watching developments in robotics, autonomous vehicles, and machines should provide confidence that a new leg of sales growth for Nvidia is likely. That, in turn, should drive the stock higher after shares have consolidated over the past couple of months. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Howard Smith has positions in Nvidia and has the following options: short February 2026 $170 calls on Nvidia. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Nvidia. The Motley Fool Australia has recommended Nvidia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Key Points

• Nvidia's relatively high price-to-sales (P/S) ratio has proven to be justified.

• Data center revenue is still climbing.

• Nvidia also has multiple growth opportunities in another segment.

Last month, Nvidia (NASDAQ: NVDA) became the first company to be valued at more than $4 trillion, as artificial intelligence (AI) has become the future of technology. The stock is trading a tiny bit under its recent record high on Thursday morning, and investors may be wondering if the stock is too expensive to buy. A look at how Nvidia became the AI leader might give investors more comfort in buying shares now.

It started with data center GPU sales

Nvidia stock does look relatively expensive right now. Its price-to-sales (P/S) ratio based on expected 2025 revenue is about 21.5. That's above its three-year average of 18.5, which itself is very high. But an elevated P/S valuation has thus far proven justified. That's because sales have soared exponentially, led by Nvidia's data center segment.

Data source: Nvidia. Chart by author.

Nvidia's stock price has risen along with those sales, and there looks to be more room to run for both. Data center sales continue to increase every quarter, and the company's next-generation graphics processing unit (GPU) Rubin architecture is slated for release in 2026.

What's next beyond data centers

Nvidia has growth potential beyond data centers, too. Revenue from its automotive and robotics segment is also growing quickly, as shown below. It could have a longer runway for growth, too.

Data source: Nvidia. Chart by author.

Companies around the world are working to make driverless cars a reality. There could be a massive market for self-driving ridesharing and taxi services. Nvidia is partnering with legacy automakers as well as start-ups like autonomous driving company Nuro to advance AI-driven autonomous vehicles.

Beyond automotive applications, robotics could also become a large market as companies seek more efficient and safer ways to operate. Nvidia's future looks bright. The stock may look expensive now, but that can quickly change as the business soars.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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• Why are ASX 200 tech stocks like WiseTech and Life360 going gangbusters on Wednesday?
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• Have ASX technology shares finally hit rock bottom?

Howard Smith has positions in Nvidia and has the following options: short October 2025 $160 calls on Nvidia. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Nvidia. The Motley Fool Australia has recommended Nvidia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Like many high-growth stocks, Nvidia (NASDAQ: NVDA) shares looked expensive on a fundamental basis over the last three years, even as its price shot higher by almost 980%. Now, some investors likely feel they've missed out because shares trade at what would be considered a relatively high price-to-earnings (P/E) ratio.

However, there's an argument to be made that Nvidia is still an inexpensive stock. Here's a look at both sides of the discussion, including one chart that really tells the story that investors should focus on.

Is Nvidia stock expensive, or is it a bargain?

Even with the stock's resounding three-year gain, its valuation has decreased when looking at price-to-free cash flow (P/FCF) and P/E ratios. That makes sense with sales exploding thanks to unprecedented demand for its GPU chips and other products supporting artificial intelligence (AI) infrastructure.

Both of those financial metrics hit one-year lows as recently as early April. The stock has surged higher since then, but both P/FCF and trailing P/E remain below their respective averages over the past 12 months. A P/E of almost 50 based on last year's earnings still may seem excessively high to some, but investors need to look forward, not back.

An estimated forward P/E of about 35 is much more reasonable for a growth stock like Nvidia. And growth is what is driving the story. Ongoing global data center construction is driving unprecedented demand for Nvidia products. Clusters of servers containing its GPUs, networking products, and AI architecture power these centers.

That's led to rocketing sales in Nvidia's data center segment. A visual display of that growth is what should give investors confidence to buy the stock at recent levels.

Data source: Nvidia. Chart by author.

Nvidia's data center sales continue to increase to record levels every quarterly period. The company plans to release next-generation chips on an annual cadence as well. That should keep sales thriving and the stock moving higher as a result.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Think Nvidia Stock Is Expensive? This Chart Might Change Your Mind. appeared first on The Motley Fool Australia.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

More reading

• Why now could be the time to buy these popular ASX ETFs
• Why are ASX 200 tech stocks like WiseTech and Life360 going gangbusters on Wednesday?
• Nvidia CEO reveals massive US$1 trillion AI chip opportunity
• Just 3 ASX ETFs could build a lazy Australian millionaire portfolio
• Have ASX technology shares finally hit rock bottom?

Howard Smith has positions in Nvidia. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Nvidia. The Motley Fool Australia has recommended Nvidia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Amazon (NASDAQ: AMZN) is undoubtedly one of the most diversified and expansive big-tech companies. The business is strong on many fronts, too. Sales grew 10% in the first quarter, excluding currency fluctuations, including a 17% jump in revenue from the Amazon Web Services (AWS) cloud services platform.

Trailing-12-month operating income was over 50% higher year over year as of the first quarter. By those metrics and more, it would seem Amazon's business is firing on all cylinders.

Yet the stock is down about 3% year to date as of this writing. Investors might want to take advantage of that since there are several reasons the artificial intelligence (AI) boom will help Amazon extend its growth businesses for years to come.

Amazon offers investors diversity and growth

Adjacent to its online retail empire, Amazon has Prime and other subscription services and related advertising on the platform. Its studios add content to the Prime streaming service. Its logistics segment has become a vast streamlined delivery operation, and AWS is a leading provider of on-demand cloud computing platforms. It has also started testing its Zoox self-driving service in six locations.

The company says its new Amazon Nova foundation model is growing rapidly, too. Nova can process text, images, and videos as prompts, helping customers use generative AI applications in various ways to make their own businesses more efficient and profitable.

The company also has its own Trainium2 advanced AI accelerator chips and architecture that make it easier for AWS customers to train models. Amazon also just launched its first Project Kuiper satellites that it hopes will provide broadband access to hundreds of millions without access today.

AI is helping Amazon streamline its own business

Amazon isn't just generating revenue and profit from AI. It's using it to streamline the company itself. The table below shows how revenue per employee has been steadily increasing in recent years.

Data source: YCharts. Table by author.

That's certainly nice for a shareholder to see. But there's another important financial metric to which investors may not be paying enough attention. Or perhaps they are, but are not interpreting it correctly.

Cash flow is a tailwind, not a concern

That metric is free cash flow (FCF), which has declined by nearly 50% year over year when measured on a trailing-12-month (TTM) basis. The fact that FCF has declined, or even been negative in some quarterly periods, shouldn't be a concern for investors, though. Investments in property and equipment impact FCF. Those investments are going to drive future growth.

Recent examples of that capital spending include plans to invest over $5 billion in Taiwan for AWS to offer more cloud infrastructure in the region with a new data center construction project. Amazon also said it will invest $20 billion in Pennsylvania to expand cloud computing infrastructure and advance AI innovation.

That AWS investment will expand its AI infrastructure with multiple campuses. As part of this project, the company expanded an agreement with a power producer to purchase power directly from a Pennsylvania nuclear plant that will support the data centers without affecting local power needs.

The declining FCF might have spooked some investors in recent months. But investors who see what current investments could do for FCF should take this year's stock price decline as a gift. It has led to price-to-sales (P/S) and price-to-earnings (P/E) ratios that are both below their averages over the past year.

That makes now a good time to buy Amazon stock, because its AI investments can help it turn around from the year-to-date drop and be a surprising winner in 2025.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Howard Smith has positions in Amazon. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Amazon. The Motley Fool Australia has recommended Amazon. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Nvidia (NASDAQ: NVDA) did it again. The artificial intelligence (AI) leader beat Wall Street expectations with another record quarterly report. The stock surged as much as 6.4% Thursday morning as a result, coming within 5% of its all-time high.

That comes even after Nvidia shares had surged nearly 25% in the last month. Investors expected to hear good things, but the 73% year-over-year growth in data center revenue drove even better-than-expected overall results.

Nvidia's growing opportunities

Nvidia reported a record $44.1 billion in overall revenue, compared to expectations of $43.3 billion. It also guided investors for $45 billion in fiscal second-quarter sales, even with an expected $8 billion in lost revenue from China sales due to export restrictions. Analysts had penciled in guidance for $45.9 billion.

The bottom line for investors is that growth remains incredibly strong. The export rules scenario remains fluid, too, so the company may be conservative in what it has already written off. Overall, business continues to grow, mostly due to a boom in AI infrastructure build-out.

CEO Jensen Huang stated in the report:

Countries around the world are recognizing AI as essential infrastructure -- just like electricity and the internet -- and Nvidia stands at the center of this profound transformation.

Yet Nvidia isn't just about AI and data centers. Its gaming segment contributed almost 10% of total sales at a record $3.8 billion. That's just one of the growth areas for the company beyond data centers. Robotics and autonomous vehicles are two others.

Nvidia is a cash machine

Investors are piling back into the stock after an April correction because its business prospects remain solid. At the same time, Nvidia is piling up cash reserves. Cash and equivalents on the balance sheet reached $53.7 billion. That's more than $10 billion higher than just one quarter ago. It also comes despite share repurchases made in the quarterly period.

Nvidia is firing on all cylinders. With global growth for AI infrastructure still in an early stage, it's not too late to own the company.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Howard Smith has positions in Nvidia. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Nvidia. The Motley Fool Australia has recommended Nvidia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Nvidia (NASDAQ: NVDA) shares soared more than 600% in the last three years. But the stock hasn't recorded any gains in 2025. Investors who are avoiding the stock because they feel the big gains are in the rearview mirror might be making a mistake.

Nvidia has taken a breather so far this year amid concerns that sales of its artificial intelligence (AI) advanced chips, software, and supercomputers may have peaked. Yet all the evidence is to the contrary, and the reality is Nvidia should see strong sales growth for quite a while.

The stock will likely move higher before those sales are in the books, however. With a seemingly insatiable appetite for its AI products, investors who buy Nvidia stock now may be putting themselves on track to retire millionaires.

Insiders see strong demand for Nvidia GPUs

The most obvious people to ask about demand are the ones buying the product. Nvidia's graphics processing units (GPUs) are still in high demand as its customers seek to expand AI compute capacity. The leaders of several big tech names reaffirmed plans to spend tens of billions of dollars on AI infrastructure this year.

They include Meta Platforms and Microsoft. Blackstone is an investor in tech start-ups, so it has a unique perspective on the industry. Chief Operating Officer Jon Gray recently said in a CNBC interview he is seeing a "ton of demand" related to AI data center investments.

Tesla CEO Elon Musk also told CNBC recently that the availability of the advanced semiconductor chips needed for AI to expand is currently the biggest limitation. Musk also said power generation and transformer capacity will become limiting factors in the near future. That bodes well for Nvidia's cadence of delivering more efficient chips on an annual basis.

Nvidia beat them and joined them

Nvidia isn't just relying on keeping its lead in supplying GPU chips, either. That's the critical factor for those investing for retirement -- a long runway of growth is key. In addition to updating its GPU technology offering annually, Nvidia just made an important announcement that can expand its market opportunities.

CEO Jensen Huang unveiled a new strategy using Nvidia's NVLink interconnect technology. NVLink is Nvidia's proprietary interconnect technology for chips that enables high-bandwidth connections between Nvidia GPUs, central processing units (CPUs), and custom silicon. It introduced NVLink Fusion, which allows third-party CPUs and accelerators to pair with Nvidia GPUs in circuit boards and server racks.

NVLink Fusion will help cement Nvidia's AI ecosystem dominance by allowing a more open model to expand the creation of AI architecture Nvidia currently controls. It helps ensure that the core of the system continues to run through Nvidia's GPU platform.

The open-system strategy lets Nvidia maintain control of data center infrastructure while letting competitors innovate around it. Plus, customers that are developing their own in-house strategies to save costs could instead choose to supply chips while still interconnecting with Nvidia infrastructure. First Nvidia beat the competition, now it's inviting them to work with it.

Long-term thinking

That's the right long-term strategy for investors who are also thinking long term. It could accelerate the use of Nvidia platforms by more industries that might prefer a "plug-and-play" type option.

If it wasn't already, Nvidia has secured its position as the standard for scaling AI systems. Investors could do well to own shares now as its growing ecosystem will result in growing sales and profits for years to come. It might just be the best stock market option for those looking to retire as millionaires.

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. Howard Smith has positions in Microsoft, Nvidia, and Tesla. The Motley Fool has positions in and recommends Blackstone, Meta Platforms, Microsoft, Nvidia, and Tesla. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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• Why are ASX 200 tech stocks like WiseTech and Life360 going gangbusters on Wednesday?
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• Have ASX technology shares finally hit rock bottom?

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. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Blackstone, Meta Platforms, Microsoft, Nvidia, and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool Australia has recommended Meta Platforms, Microsoft, and Nvidia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

There may never have been a smoother transition from an iconic CEO to a successor. Warren Buffett and Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) let markets know several years ago that Greg Abel would be Buffett's eventual replacement. Abel is currently vice chairman of Berkshire's non-insurance businesses.

Buffett officially said this weekend that he would step down and hand the reins to Abel at the end of the year. The announcement came as a surprise, even though investors had known to expect it. Berkshire shares tanked Monday on the news, dropping nearly 7% before paring those losses.

Investors might be wondering whether they should be buying or selling Berkshire Hathaway stock now.

Can Berkshire survive without Buffett?

Buffett was the key force in building Berkshire Hathaway into a trillion-dollar company. So it's natural for investors to wonder about holding the stock when Warren Buffett is no longer the decision-maker. Today's stock reaction is overdone, though. Buffett will be staying on as chairman of the board and isn't even passing the CEO torch to Greg Abel until the end of the year.

Some investors may have wanted to have their money handled by Buffett himself. His investing philosophy is unique, and his results have been spectacular. That includes this year as Berkshire stock has greatly outpaced the S&P 500 index thus far.

On Saturday, at the 2025 shareholders meeting, Buffett said that not only will Berkshire survive, he thinks it will thrive under Abel's leadership. Buffett said Abel would be even better than he at managing the company's vast array of operating businesses.

Buffett made his name by being opportunistic. He poured billions into quality names during the Great Recession of 2008-2009. Investors should do the same with Berkshire stock, though even today's drop doesn't make shares a bargain. They trade at a relatively high valuation compared to recent years. Starting a position now could make sense, but wait for a bigger drop to dive in.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Howard Smith has positions in Berkshire Hathaway. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Berkshire Hathaway. The Motley Fool Australia has recommended Berkshire Hathaway. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

It was nearly one year ago that Nvidia (NASDAQ: NVDA) last split its stock. That 10-for-1 stock split was the sixth in the company's history since entering the public markets in 1999. Shares proceeded to march to an all-time closing high about six months after last June's stock split.

Shares have since retreated along with many others as the Nasdaq Composite index briefly entered bear market territory in early April, declining more than 20% off recent highs. Yet Nvidia has been resilient and its share prices have recently rebounded. While the downturn in the stock market may not be over, it will eventually gain ground again. Nvidia continues to have a leading business covering artificial intelligence (AI), gaming, robotics, driver assistance, and self-driving technologies.

Stock-split facts

That business is what should attract investors to Nvidia stock. Another stock split could also be in its future, though. And history shows that owning shares before they split can pay off.

Image source: Statista.

To determine why that might be, let's look at reasons companies split their stocks in the first place. After all, a split doesn't affect the value of the company one bit and even adds some expenses in logistics, legal fees, and other nominal costs.

Splitting a stock can increase liquidity by making shares more affordable for a larger group of investors. Retail investors are likely part of the increased trading volume because lower-priced shares look more attractive to those just starting out or with limited funds to invest. Fractional shares are offered at many brokerages now, but most people probably don't utilize that rarely-promoted option. So a lower share price can appeal to more buyers. It is a perception of affordability.

Companies also tend to split stocks that have trended higher. Announcing a split tends to give investors added confidence that further strong performance is ahead. The stock may also be included in more major stock indexes, especially those that use price-weighted calculations. Lastly, splits may also be announced with company employees in mind. Employee share purchase plans may get more participation if shares are more affordable to participants.

Value ahead for Nvidia

So while stock splits don't directly affect the company's value, i.e., its market capitalization doesn't change, investor perception and market activity can tend to aid future performance. Nvidia management can also look beyond short-term volatility toward positive future business developments to gain confidence to announce another stock split.

Most investors are focusing on Nvidia's growing data center revenue. That segment accounted for the bulk of its revenue growth in the past fiscal year ended Jan. 26, 2025. But each of its other three segments has increased revenue annually over the last two years. Gaming is a more than $10 billion segment. It only accounted for about 9% of sales last year, though, so many investors are discounting Nvidia's other growth areas.

Perhaps its greatest growth potential comes from automotive and robotics end uses. That segment is at a much lower base than data centers, and its total addressable market could be ready to go through a growth spurt. Automakers already include advanced driver assistance packages and may be on the cusp of selling fully autonomous vehicles. Robotics technology may also be at the point of transition from stationary industrial uses to mobile, humanoid versions that can help businesses further improve efficiency.

Is a stock split coming?

Those are better reasons to buy Nvidia stock than anticipating the next stock split. History does show that a split announcement could result in market-beating returns. Yet I think Nvidia stock will outpace the market simply for fundamental reasons.

Nvidia's management and board of directors will likely wait for ongoing market turmoil to settle before announcing its next stock split. It makes sense for investors to own the stock regardless, though. That way, you can participate in a fast-growing company along with any future stock splits that might be announced.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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More reading

• Why now could be the time to buy these popular ASX ETFs
• Why are ASX 200 tech stocks like WiseTech and Life360 going gangbusters on Wednesday?
• Nvidia CEO reveals massive US$1 trillion AI chip opportunity
• Just 3 ASX ETFs could build a lazy Australian millionaire portfolio
• Have ASX technology shares finally hit rock bottom?

Howard Smith has positions in Nvidia. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Nvidia. The Motley Fool Australia has recommended Nvidia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Nvidia (NASDAQ: NVDA) doesn't develop large language models. It doesn't create computer game franchises. It doesn't manufacture humanoid robots or autonomous vehicles, either. What Nvidia does is create the computing hardware technologies needed for all of these efforts.

Companies around the world are devoting capital to these projects. Nvidia has been, and will continue to be, a leading computing supplier for these technologies. With a product suite that offers hardware, software, and other expertise, it should stay at the forefront as businesses keep advancing and innovating.

Yet that's not the real reason Nvidia stock can soar over the next five years.

Be greedy when others are fearful

A stock market correction can be a long-term investor's best friend. The Nasdaq Composite index has now entered correction territory since its closing high of 20,174 on Dec. 16. One result of the market downturn is a more than 20% drop in Nvidia shares so far this year.

Large companies are investing hundreds of billions of dollars in artificial intelligence (AI) infrastructure, a big reason Nvidia generated over $130 billion in revenue last year.

Management predicts the first quarter of Nvidia's fiscal 2026, which began in late January, will see 65% revenue growth over the year-ago period. That impressive increase is likely to slow as the year progresses and it faces tougher comparisons. But new catalysts could reaccelerate sales growth in the coming years.

Those include growing business outside of data centers for Nvidia. The company's gaming segment increased revenue by 9% last year. Professional visualization -- which includes a new personal AI supercomputer -- grew sales by 21%, while robotics and automotive revenue soared 55%.

Nvidia has many irons in the fire that could all meaningfully contribute over the next five years. With shares trading nearly 30% below early January highs, now is a good time to follow Warren Buffett's advice and buy this great stock while others are fearful.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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More reading

• Why now could be the time to buy these popular ASX ETFs
• Why are ASX 200 tech stocks like WiseTech and Life360 going gangbusters on Wednesday?
• Nvidia CEO reveals massive US$1 trillion AI chip opportunity
• Just 3 ASX ETFs could build a lazy Australian millionaire portfolio
• Have ASX technology shares finally hit rock bottom?

Howard Smith has positions in Nvidia. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Nvidia. The Motley Fool Australia has recommended Nvidia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Nvidia (NASDAQ: NVDA) shares were dropping again to start the trading week, down nearly 9% as of 3:15 p.m. ET Monday.

Nvidia, the leader in artificial intelligence (AI) advanced chips and software architecture, released another strong quarterly report last week, but its stock has plunged more than 13% since then. And while its share price soared in 2024, it's now trading below its levels from six months ago.

Investors should understand what's driving the negative sentiment that contributed to Nvidia's post-earnings slump. Here's why now may be the chance to act for those who might have felt they'd missed out on owning Nvidia shares last year.

Fears of a slowdown may be overblown

Nvidia's recent drop stems from investors' fears that export controls may be coming for high-performing AI chips. Restrictions are already in place that limit Nvidia's most powerful chips from being exported to China. But the semiconductor sector is now being rattled by The Wall Street Journal's report this weekend that Nvidia's latest Blackwell chips are being offered in China through companies in other Asian countries. That has investors fearing other countries -- including Singapore, Vietnam, and others -- could be added to a sanction list for Nvidia's highest-powered chips.

But I think Nvidia stock's decline does look like a buying opportunity. First, Nvidia has long been battling fraud and transshipments by bad actors as it works to adhere to U.S. export rules.

Second, the company beat expectations for revenue growth once again in its recent fiscal fourth quarter. Revenue soared 114% for its full fiscal year. And the company predicts another record for revenue in the current quarter.

While revenue growth may slow this year, sales -- and earnings -- should continue to increase. And the stock is now valued at about 26 times the next 12 months' expected earnings. That's well below its three-year average of 35 times. That makes now a good time to buy this high-growth stock.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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• Why are ASX 200 tech stocks like WiseTech and Life360 going gangbusters on Wednesday?
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Howard Smith has positions in Nvidia. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Nvidia. The Motley Fool Australia has recommended Nvidia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

One of the most highly anticipated quarterly reports on Wall Street was provided by Nvidia (NASDAQ: NVDA) last night. And the artificial intelligence (AI) darling didn't disappoint.

Data center revenue continued to surge higher, and CEO Jensen Huang sounded as optimistic as ever. Yet the stock declined by more than 8% on Thursday.

That extended its losses in 2025 after an amazing 171% return in 2024. Based on the state of the business, though, the recent decline in the stock might just be a gift for long-term investors.

No time to get discouraged

Management previously guided investors to expect revenue of about $37.5 billion in the fourth quarter. As has been the case all last year, the company exceeded that mark with sales of $39.3 billion. Full-year revenue more than doubled year over year.

But investors are looking ahead to figure out when that revenue growth might slow. Nvidia sees sales of about $43 billion in its current quarter. That would represent sequential growth of less than 10% compared to the mid-teens growth rate it had been reporting most of last year.

Investors also noticed something Huang said in the conference call for investors. "Data center sales in China remained well below levels seen on the onset of export controls. [And] the market in China for data center solutions remains very competitive," he said.

Another concern is a decline in profitability. Gross margins in the current fiscal first quarter are expected to be about 71%. That compares to 75% in the fiscal year ended Jan. 26.

But Nvidia is still showing impressive growth and profits in the data center business. At the same time, its automotive and robotics segment is also beginning to take off. Quarterly growth there has been impressive.

Data source: Nvidia. Chart by author.

While it still pales in comparison to data center AI sales, this could be the catalyst for Nvidia's next phase of growth. Investors would be wise not to bet against Nvidia.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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More reading

• Why now could be the time to buy these popular ASX ETFs
• Why are ASX 200 tech stocks like WiseTech and Life360 going gangbusters on Wednesday?
• Nvidia CEO reveals massive US$1 trillion AI chip opportunity
• Just 3 ASX ETFs could build a lazy Australian millionaire portfolio
• Have ASX technology shares finally hit rock bottom?

Howard Smith has positions in Nvidia. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Nvidia. The Motley Fool Australia has recommended Nvidia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Nvidia (NASDAQ: NVDA) will shortly release one of Wall Street's most highly anticipated earnings reports. The artificial intelligence (AI) chip leader has outpaced its own guidance by a wide margin all year.

Yet investors have been selling the stock in droves lately. Shares are down more than 15% since 6 January, including a 2.8% decline on Tuesday.

The catalyst for Tuesday's drop may be from investors thinking Nvidia's trend of exceeding sales forecasts may soon come to an end. That's because the Trump administration is reportedly seeking to further tighten restrictions on U.S. semiconductor chip sales to China.

Nvidia's impressive sales streak

Nvidia has repeatedly beaten its own sales expectations as large tech companies line up to purchase its advanced AI chips and software platforms. Companies need Nvidia's advanced hardware to build smarter and more complex AI models.

Driven by its robust data centre segment, Nvidia has beaten the midpoint of its own sales guidance by at least $2 billion in each of its first three fiscal 2025 quarters. It expects fiscal fourth-quarter sales of about $37.5 billion. That's up from the $35.1 billion it reported in the prior quarter. It's also 70% higher than the $22.1 billion in revenue recorded in the prior year period.

But reports on Tuesday said that the Trump administration is looking to tighten the controls on advanced AI chip sales to China begun under former President Biden. Nvidia has been able to continue selling its older or modified chips under the previous restrictions as demand remained strong even for that hardware.

Tighter restrictions meant to limit China's technological prowess could impact Nvidia's sales growth. New regulations haven't yet been announced, so CEO Jensen Huang may not even discuss the topic with Nvidia's earnings report release.

What's ahead for Nvidia stock?

But some investors may be happy taking profits after Nvidia's amazing 440% gain over the last three years. I think Nvidia's market for those chips, as well as its other products, is big enough to navigate any of those headwinds, and more growth lies ahead.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why Nvidia stock continues to plunge ahead of earnings appeared first on The Motley Fool Australia.

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• Why now could be the time to buy these popular ASX ETFs
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• Have ASX technology shares finally hit rock bottom?

Howard Smith has positions in Nvidia. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Nvidia. The Motley Fool Australia has recommended Nvidia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

After a torrid 548% run over the past two years, Nvidia (NASDAQ: NVDA) shares have largely been flat since November. That's understandable as investors digest its growth prospects in a rapidly changing artificial intelligence (AI) industry.

However, one Wall Street analyst thinks shares are ready to pop again. KeyBanc's John Vinh rates the stock as overweight and just raised his price target from $180 to $190 per share. The new target implies more than 46% upside for Nvidia's shares.

Nvidia hit by the DeepSeek shake-up

One reason the stock has been range-bound recently is the fear that massive spending on artificial intelligence (AI) infrastructure is now in limbo. That uncertainty stems from DeepSeek, a Chinese AI start-up that released a powerful new large language model (LLM) that it claims to have trained for just $6 million. This low-budget success story has called into question the plans of U.S. tech companies to spend over $300 billion on AI investments in 2025.

According to Vinh, this uncertainty around the industry and Nvidia has created a buying opportunity. He believes the company will beat expectations when it reports fiscal 2025 fourth-quarter results on February 26. Vinh also thinks the company will soothe any investor concerns with solid guidance for the current quarter.

Nvidia previously provided Q4 revenue guidance of $37.5 billion (at the midpoint). Vinh expects the company to hit the high end of the range with $38.2 billion in sales, according to Barron's. More importantly, he believes revenue will jump again to $43.0 billion in its fiscal 2026 first quarter.

If Nvidia continues to grow revenue quarter after quarter, it's likely that Vinh's prediction will ultimately play out. Shareholders are certainly counting on the company's top and bottom lines to keep growing as the stock trades at a forward price-to-earnings (P/E) ratio of 30 as of this writing. If management can reassure investors with the upcoming report, its valuation multiple might even expand. And combined with continued earnings growth, Nvidia may be able to deliver the gains Vinh predicts.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

More reading

• Why now could be the time to buy these popular ASX ETFs
• Why are ASX 200 tech stocks like WiseTech and Life360 going gangbusters on Wednesday?
• Nvidia CEO reveals massive US$1 trillion AI chip opportunity
• Just 3 ASX ETFs could build a lazy Australian millionaire portfolio
• Have ASX technology shares finally hit rock bottom?

Howard Smith has positions in Nvidia. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Nvidia. The Motley Fool Australia has recommended Nvidia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

After a huge run higher, Nvidia (NASDAQ: NVDA) stock hasn't even been keeping up with the overall market in recent months. There are several reasons for that, but the big question for investors is whether it's now time to take advantage of Nvidia's stagnant share price.

The stock soared about 85% over the last year, yet it is lower than it was four months ago, even as the S&P 500 has a total return of about 4% in that time. But now it looks like there are over 300 billion more reasons to buy the stock. That's because several big tech companies plan to spend as much as $320 billion on data centres and artificial intelligence (AI) infrastructure over the next year.

Hopper to Blackwell to Rubin AI solutions

Nvidia's recent success is relatively easy to explain. Its advanced AI graphics processing unit (GPU) chips are in high demand. Using management's guidance for its soon-to-be-reported fiscal fourth quarter, revenue for the fiscal year ended in late January should show year-over-year growth of about 110%. That's especially impressive considering quarterly revenue is approaching $40 billion.

Nvidia also shared its plans with investors for continued innovation that should keep driving demand. Sales of its H100 and H200 GPU chips have been boosting revenue growth, and Nvidia now has its Blackwell AI architecture in production.

CEO Jensen Huang has called demand for Blackwell "insane." Investors will hear an update on its Blackwell sales when Nvidia reports earnings on February 26. The company might also discuss the next-generation Rubin AI platform that is due in 2026.

Massive total addressable market

One recent headwind for Nvidia stock was the surprising announcement last month from privately owned Chinese start-up DeepSeek. That company reportedly created a high-performing large language model (LLM) for just $6 million. While many question the authenticity of that total capital cost, the DeepSeek product raised uncertainty about how much large-cap tech companies would continue to spend on Nvidia AI products.

But those companies aren't throttling back on spending. Meta Platforms, Amazon, Alphabet, and Microsoft each announced spending plans for data centres and AI infrastructure in 2025. As a group, the investments could total as much as $320 billion over the course of just one year.

Amazon expects to lead the way with $100 billion in capital expenditure. CEO Andy Jassy stated, "The vast majority of that capex spend is on AI for AWS (Amazon Web Services)." Alphabet plans about $75 billion and Meta $65 billion. Microsoft will continue on its plan for $80 billion in AI investments through June of this year.

That company said it is already seeing returns on its investment. Satya Nadella, chairman and CEO of Microsoft, noted, "Already, our AI business has surpassed an annual revenue run rate of $13 billion, up 175% year over year." Nvidia is the clear leader in hardware for AI infrastructure and is arguably the biggest benefactor from all that capital spending.

Nvidia's under-the-radar catalysts

On top of those tailwinds related to AI data centre spending, Nvidia has other growing segments. Its gaming business generates the second most revenue. Gaming revenue has accelerated in each of the last three quarters, reaching its highest level since Nvidia's quarterly period ended May 1, 2022.

Its professional visualisation business provides a platform for creating industrial AI simulations and uses AI to drive efficiencies for industrial developers. That segment's revenue has increased in each of the past three quarters and has more than doubled in the last two years. Automotive and robotics revenue has also accelerated, with growth in each of the last five quarterly periods.

Those other business segments use AI and also offer software solutions to Nvidia's AI hardware customers. That helps to provide a flywheel effect as its next-generation AI architecture continues to improve and be utilised in its various platform solutions.

The upcoming quarterly report could bring share price volatility, but investors should look to hold Nvidia for its long-term potential. A pullback that might come from the quarterly report would just provide an opportunity to buy more Nvidia stock.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

More reading

• Why now could be the time to buy these popular ASX ETFs
• Why are ASX 200 tech stocks like WiseTech and Life360 going gangbusters on Wednesday?
• Nvidia CEO reveals massive US$1 trillion AI chip opportunity
• Just 3 ASX ETFs could build a lazy Australian millionaire portfolio
• Have ASX technology shares finally hit rock bottom?

Howard Smith has positions in Alphabet, Amazon, Microsoft, and Nvidia. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. 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. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet, Amazon, Meta Platforms, Microsoft, and Nvidia. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool Australia has recommended Alphabet, Amazon, Meta Platforms, Microsoft, and Nvidia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Maybe you've been letting extra cash accumulate in an online savings account that's paid a decent interest rate. Or you stashed an end-of-year bonus to buy some stock when the market pulls back. The S&P 500 has surged higher by more than 20% for two consecutive years now, so the thought of getting in at these lofty levels might be nerve-wracking.

But with rates in those savings accounts starting to drop, it may be time to pull the trigger. And you want to be aggressive with this money. You can afford to if you're young, or even just have other buckets with more conservative investments.

Palantir's surge of greatness

The fast-growing artificial intelligence (AI) sector is where you think this money should go. That makes sense, as it may still be in its infancy stage and has massive potential to transform how companies do business. Like many others, you might think both Nvidia (NASDAQ: NVDA) and Palantir Technologies (NASDAQ: PLTR) have plenty more potential, even after both stocks rocketed higher.

Nvidia captured most of the headlines in the last year or two, but it might surprise investors to find out that Palantir stock outpaced Nvidia's returns by a wide margin. Palantir grew quickly by offering AI software platforms that help manage and secure data for user- and machine-assisted analysis. Its applications expanded from the military to include commercial customers as well. Palantir stock rocketed more than 750% in the last three years.

Of course, Nvidia stock also provided a market-thrashing return of 425% in that time thanks to its AI hardware and software offerings. But Palantir is currently the hot stock, with much of that three-year return coming in just the last 12 months.

That's because the company is quickly growing sales at a time when much focus is on improving efficiencies and problem-solving in U.S. government agencies, law enforcement agencies, financial institutions, and commercial enterprises. All of these are part of Palantir's customer base.

Both companies are growing fast

Palantir and Nvidia are high-growth tech stocks. Yet it's fair to question whether Palantir is growing fast enough to justify its recent stock surge. Sales increased 29% year over year in 2024.

And the rate of growth is increasing, too. Management predicts 2025 revenue will grow 31% versus last year. It's profitable growth as well, with an operating profit margin of 39% for full-year 2024.

But Nvidia is still growing even faster. That's impressive for what is a much larger company. Nvidia's market cap of almost $3.2 trillion compares to $250 billion for Palantir. Nvidia is scheduled to report its fiscal fourth-quarter earnings on February 26. Using management's guidance, though, revenue for the fiscal year ending in late January 2025 will show growth of about 110% year over year.

Stock value reflects Palantir's growth

Maybe more importantly, Nvidia shows sequential quarter-over-quarter revenue growth in the high teens over the last six months. Palantir's quarter-over-quarter sales growth accelerated to 14% in its most recent quarter.

It might continue to accelerate, but by some metrics, Palantir's valuation dwarfs that of Nvidia. Palantir's forward price-to-earnings (P/E) and price-to-sales (P/S) ratios are a mind-boggling 200 and 67, respectively. Compare that to just about 30 and 16, respectively, for Nvidia.

Nvidia's optionality

Nvidia's sales are predicted to continue to grow thanks to its AI-focused chips. The company also created an ecosystem of related software that keeps its AI solutions in high demand. But even if its growth rate slows more than market watchers anticipate, the stock is still a better value than Palantir.

And while Nvidia's data center segment is the focus of its growing sales, servers and compute power aren't the only places where its technology will be used. Nvidia will benefit if self-driving vehicles and robotics become more mainstream. While sales in those areas pale in comparison to data centers, it could be the next growth catalyst for Nvidia.

Data source: Nvidia. Chart by author.

Palantir has great potential as a business and also as a stock investment. And investors with a tolerance for risk and stress may want to invest in the AI software company in stages.

But Nvidia also still has much more potential for growth. It's also trading at a much lower valuation than Palantir. That should lead to better returns in the near- and mid-term. In my opinion, that makes it the better AI stock to buy now.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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• Have ASX technology shares finally hit rock bottom?

Howard Smith has positions in Nvidia. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Nvidia and Palantir Technologies. The Motley Fool Australia has recommended Nvidia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Tesla (NASDAQ: TSLA) stock has been in freefall, and that accelerated today. Shares of the electric vehicle (EV) leader are now lower by more than 18% so far this year. As of market close, Tesla shares were down by 6.34% on the day.

The recent decline comes as CEO Elon Musk has stayed in the spotlight more for his work in Washington, D.C., than at Tesla headquarters. But today's share decline comes from a combination of reasons.

Chinese competition increases

Investors received news of what could be yet another distraction for Musk from his work at Tesla. The Tesla CEO is leading a group proposing to buy artificial intelligence (AI) developer OpenAI. Musk was one of OpenAI's founders but has more recently been feuding with Sam Altman. Altman is another of the company's founders and remains its CEO. Musk's $97.4 billion bid for the company was met with defiance from Altman.

It pales in comparison to the $300 billion valuation that a new $40 billion funding round reportedly led by Softbank Group would imply. Musk's offer is being viewed as the opening salvo in a new battle with Altman as he seeks to reset OpenAI into a for-profit company. And Tesla investors just see it as another distraction for Musk.

As if that weren't enough to fuel the Tesla bears, Chinese rival BYD also released news that could hurt Tesla's EV sales. BYD introduced its driver assistance system yesterday, making it available on most of its models, including its low-cost EVs priced below the equivalent of $10,000.

BYD said its driver assist system will use DeepSeek's AI. This comes with Tesla still working to get approval from China's regulators for a driver-supervised version of its autonomous driving software.

With the Tesla CEO busy with multiple other ventures and its largest global rival moving forward with its AI-based technology, Tesla stock is taking a hit today. Some may view the decline as an opportunity should Tesla release a fully autonomous vehicle this year. But for now, the freefall in Tesla shares continues.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Howard Smith has positions in BYD Company and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended BYD Company. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Artificial intelligence (AI) leader Nvidia (NASDAQ: NVDA) had a strong 2024. During the year, analysts debated how high its data centre revenue could grow as it rolled out new products. Hyperscaler customers kept increasing capital spending to build out data centre compute power. But things turned on a dime in January 2025 when Chinese hedge fund-owned DeepSeek dropped an AI bombshell regarding resources needed to do AI well.

Rather than wondering how Nvidia's latest AI chip sales were going, some investors cared more about how to invest in DeepSeek and its claims that it created a high-performing large language model (LLM) with just $6 million in capital. The news led to an 11% decline in Nvidia stock thus far in 2025. But questions remain about DeepSeek and its claims, and investors would be smart to focus on what Nvidia says in its next earnings report (due on February 26).

Data centres and more

Before the DeepSeek news, all eyes were on Nvidia's unprecedented revenue growth -- specifically, in its data centre segment. The unsustainable rate of growth was slowing, though, and Nvidia's share price had already rocketed higher as those sales soared.

If spending on generative AI infrastructure comes to a screeching halt, as some have surmised from the DeepSeek news, the quarter-over-quarter growth in Nvidia's data centre revenue should quickly reverse. As seen below, it appeared to begin stabilising at a mid-teens growth rate in the last quarter.

Source: Nvidia. Note: Fiscal 2025's Q3 ended Oct. 27, 2024.

That's the number I'll continue to watch to see if Nvidia's share price can recoup recent losses and more -- at least in the short term. Nvidia also has other irons in the fire for the long term.

Data source: Nvidia. Chart by author.

The company's auto and robotics segment will be the next area to watch. That revenue pales in comparison to the data centre but could be the next impactful growth catalyst for Nvidia.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

More reading

• Why now could be the time to buy these popular ASX ETFs
• Why are ASX 200 tech stocks like WiseTech and Life360 going gangbusters on Wednesday?
• Nvidia CEO reveals massive US$1 trillion AI chip opportunity
• Just 3 ASX ETFs could build a lazy Australian millionaire portfolio
• Have ASX technology shares finally hit rock bottom?

Howard Smith has positions in Nvidia. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Nvidia. The Motley Fool Australia has recommended Nvidia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Nvidia (NASDAQ: NVDA) was one of the best-performing stocks of 2024. It even dwarfed the returns of the Nasdaq Composite index in a year the index itself returned an amazing 28.6%. Its stock price soared as the market became enthused by consistent triple-digit revenue gains that led to triple-digit net income gains. That led to a 171% increase in Nvidia's stock price in 2024. It also pushed the stock's price-to-sales ratio to 30.

Those who might think that means the stock is now too expensive should look at the opportunity still ahead. Enough opportunity can trump a high P/S. One chart might help explain.

The market opportunity tells the story

Big tech companies continue to ramp up spending to build artificial intelligence (AI) infrastructure. Microsoft and Amazon each recently announced commitments to invest $80 billion and $11 billion, respectively, in the coming months. The investments are for data centres to train AI models, and distribute AI and cloud-based applications. That's because the market for generative AI is expected to grow tenfold over the remainder of the decade.

Image source: Statista.

Generative AI has a wide array of applications. It is already being used to generate content and enhance creativity. Businesses use it to enhance customer experiences by adapting content and services to individual preferences. It can enhance existing data, improve cost efficiency, foster innovation, and aid in simulations and planning. Investors themselves are using generative AI for multiple reasons.

Nvidia will be a major beneficiary of the investments to build out the needed infrastructure. Its Blackwell architecture is already in high demand, and the company will have its new Rubin platform available next year to succeed Blackwell.

CEO Jensen Huang also introduced a new desktop supercomputer at the recent CES conference in Las Vegas. The $3,000 unit can be used by researchers, data scientists, and even students. It shows that Nvidia is broadening the market for its advanced chips beyond just hyperscaler data centres.

With a quickly growing market for generative AI and innovative products, Nvidia has enough business opportunity ahead to justify the elevated valuation.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

More reading

• Why now could be the time to buy these popular ASX ETFs
• Why are ASX 200 tech stocks like WiseTech and Life360 going gangbusters on Wednesday?
• Nvidia CEO reveals massive US$1 trillion AI chip opportunity
• Just 3 ASX ETFs could build a lazy Australian millionaire portfolio
• Have ASX technology shares finally hit rock bottom?

Howard Smith has positions in Amazon, Microsoft, and Nvidia. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Amazon, Microsoft, and Nvidia. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool Australia has recommended Amazon, Microsoft, and Nvidia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The stock of Tesla (NASDAQ: TSLA) had a monster run to end 2024. It's starting 2025 on a down note, though, and not just due to profit-taking.

Tesla just released its fourth-quarter and full-year electric vehicle (EV) delivery data, and investors weren't impressed.

For the first time ever, the company realised a year-over-year decrease in the volume of EVs it shipped to customers. As a result, shares declined by as much as 7.5% on Thursday morning in the United States. That helped pause the late 2024 rally that led to a return of more than 62% last year.

Beyond Tesla's EVs

Management reported 495,570 EV deliveries in the fourth quarter. Although that was a quarterly record, it missed expectations for about 505,000 shipments. This also meant that Tesla delivered slightly fewer vehicles in 2024 than in 2023. Full-year deliveries were about 1.79 million, compared to 1.81 million in the prior year.

But investors need to look beyond Tesla's EVs to understand the stock's valuation. Its energy segment is one area to watch. After experiencing 125% growth in energy deployments in 2023, the company's 31.4 gigawatt hours (GWh) of energy storage deployed in 2024 represented another 114% increase year over year. Energy storage demand has increased as renewable energy production has grown.

But many investors are waiting for the company to roll out a truly autonomous vehicle that doesn't require human intervention. Elon Musk has touted Tesla's self-driving technology to enable a fleet of robotaxis that would provide a potentially large new income stream for the company. Its robotics division could also be a future income contributor.

For now, though, income and profits are coming from EV sales. With a slight decline for the first time year over year, some investors are selling shares today after a huge return in 2024.

Long-term investors should continue to watch how Tesla's technology continues to evolve and decide if that potential is worth holding on to shares.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why Tesla stock dropped to start the New Year appeared first on The Motley Fool Australia.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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• Guess which ASX All Ords stock is jumping higher today on big Tesla news

Howard Smith has positions in Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Tesla. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Tesla (NASDAQ: TSLA) stock has seemingly gone straight up since the U.S. election. That more than 80% rise has brought it to new all-time highs. Shares jumped another 6.14% today. And one Wall Street analyst thinks there are good reasons for the recent parabolic move.

Wedbush analyst Dan Ives just released a report in which he raised his price target on the stock by $115 per share. His new target is $515, the highest price target for Tesla on Wall Street. Ives sees the recent run in the stock as being logical based on new circumstances brought by the election of Donald Trump.

All about self-driving tech

Tesla CEO Elon Musk supported Trump monetarily and vociferously before the election. He's now become one of Trump's advisors with a place in the incoming administration. Ives wrote that Musk's new position is a "total game changer for the autonomous and AI [artificial intelligence] story for Tesla and Musk over the coming years."

Many Tesla observers, including Elon Musk, believe that Tesla should be valued more on the potential future income from its self-driving technology than its existing car sales. Ives believes that a new Trump administration will open the door for that technology to quickly gain traction.

Ives doesn't think Tesla stock will stop at $515 per share, either. He believes the self-driving technology -- known as full self-driving, or FSD -- can drive Tesla's valuation to over $2 trillion in the next 12 to 18 months. That would imply a stock price of about $625 per share by the middle of 2026. That's another 35% gain from recent prices.

Musk has said that investors shouldn't own Tesla stock if they don't feel it will solve issues associated with autonomous driving. The company has made strides sending out new updates that still require driver supervision.

The timing could be right for Tesla's technology to hit the streets with the advanced versions and a friendly administration in the White House. That has investors buying into what Ives published today.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why Tesla stock just jumped again appeared first on The Motley Fool Australia.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

More reading

• Guess which ASX All Ords stock is jumping higher today on big Tesla news

Howard Smith has positions in Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Tesla. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.