Flying Higher and Beyond

With the $S&P 500 Index(.SPX.US)$ taking a breather from the recent rally, semiconductor stocks may be in trend. For the most part, semiconductors are now a fundamental component of most technology in the world today. As such, some of the top semiconductor firms  $Taiwan Semiconductor(TSM.US)$, $NVIDIA(NVDA.US)$, $ASML Holding(ASML.US)$, $Intel(INTC.US)$, $Broadcom(AVGO.US)$,  $Qualcomm(QCOM.US)$ may be in focus, especially as the industry kicks into higher gears to cope with increasing demands. Among the powerhouse names in semiconductor stocks, $NVIDIA(NVDA.US)$ continues to be in the radar of investors. On the fundamental front, $NVIDIA(NVDA.US)$ is already an expensive stock with lofty valuation in terms of P/E multiple. Nevertheless, its expensive valuation may be justified with its spectacular growth. There are positive growth catalysts that can ensure strong growth rates in the long run. The video gaming sector is in the early phases of a long term upgrade cycle. $NVIDIA(NVDA.US)$ could gain from shipping more graphic cards to gamers and benefit from a combination of stronger volumes and higher pricing. The data centre business is the next most important growth driver. Investors can expect solid growth from this segment as its GPUs are deployed by hyperscale data centres and cloud service providers to deal with Artificial Intelligence workloads. With $NVIDIA(NVDA.US)$ tapping other types of data centre chips as well, it is reasonable to assume that this segment could continue to grow at impressive rates in the future. The automotive business has been an underperformer for $NVIDIA(NVDA.US)$. The good news is that its automotive prospects seem to improve now as the adoption of its DRIVE platform picks up the pace with several automotive design wins that has started to translate into revenue. The automotive business is built for long term growth as the adoption of EVs like $Tesla(TSLA.US)$ increases, spurring more demand  for the company's hardware and software offerings. $NVIDIA(NVDA.US)$ is clearly on its way to exploit the  potential growth of the autonomous vehicle market. Investors looking for a solid growth stock in the semiconductor industry may consider $NVIDIA(NVDA.US)$ in their portfolio before it becomes even more expensive, as it appears capable of justifying its rich valuation, thanks to the growth opportunities it is sitting on in the automotive business, apart from the fast growing video gaming and data centre markets that have  been the firm pillars of the company's impressive financial growth so far. The market value of $NVIDIA(NVDA.US)$ could rise substantially over the years as the growth trends in Artificial Intelligence, Cryptocurrency and autonomous driving are set to accelerate. Investing in $NVIDIA(NVDA.US)$ offers a direct exposure to these long term growth trends. While market corrections are unavoidable, patient investors with $NVIDIA(NVDA.US)$ could anticipate a sizeable return in the future.
$NASDAQ 100 Index(.NDX.US)$