NVDIA are currently the leading producer of data center processor hardware and systems. Their big selling point is the compute requirement to power AI.
I think AI is a bit faddish. AI is a re branding of programs that have really been with us since spell check and auto correct. Not all AI is new.
However true AI is Generative AI. Generative AI uses existing referencing (like Google search) and inferenceing. Inferencing is where programs can develop conclusions and hypotheses from referenced data, test and validate outcomes and use logic steps to solve problems.
This is a great step forward in machine intelligence but successful commercial implementation may be some way off. For example vast infrastructure is required for driver less taxis. WiFi saturation of entire cities and countries via networks such as Star Link, cars that will work , be safe and be accepted by the users. This implies a time delay for development and sales of data centre equipment.
Competitors like AMD, ARM, Intel, Microsoft and Amazon may eventually diminish NVDIA's moat in this area.
Developments in this market can change quickly so keeping a watch and being agile would be helpful.
The Taiwan geographical situation is also a risk.
NVDIA has good leadership and strong fundamentals but may have to reinvent itself in the face of entrepreneurial competition.
All said I would be inclined to rate NVDA along with AMD as a short to medium term buy for now.
How well do narratives help inform your perspective?
Disclaimer
The user JTV holds no position in NasdaqGS:NVDA. Simply Wall St has no position in any of the companies mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The author of this narrative is not affiliated with, nor authorised by Simply Wall St as a sub-authorised representative. This narrative is general in nature and explores scenarios and estimates created by the author. The narrative does not reflect the opinions of Simply Wall St, and the views expressed are the opinion of the author alone, acting on their own behalf. These scenarios are not indicative of the company's future performance and are exploratory in the ideas they cover. The fair value estimates are estimations only, and does not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that the author's analysis may not factor in the latest price-sensitive company announcements or qualitative material.