Nvidia crushes estimates again, but the alarm has been sounded?
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A long-term perspective will be crucial to successfully invest in Nvidia
Nvidia has been the preeminent name in graphics processing units (GPUs) for years, controlling 87% of the market as of Q2 2023 (per Jon Peddie Research). Prior to last year, one of Nvidia's biggest advantages was its popularity with PC gamers, who use the company's GPUs to power their custom-built gaming machines. However, advances in AI have changed the dynamic for the company.
Nvidia's most powerful GPUs are crucial hardware for companies seeking to develop, train, and deploy AI models, and demand driven by those uses has sent Nvidia's chip sales skyrocketing this year. In its fiscal Q3 2024 (which ended October 30), revenue rose 206% year over year, while operating income increased by over 1,600%. The company massively benefited from soaring demand for GPUs, which saw its data center segment achieve revenue growth of 279%.
Nvidia's business will likely continue growing as tech companies increasingly require more powerful chips to take their products to the next level. Yet, it will face more competition in 2024 as various chipmakers challenge Nvidia's dominance by launching new GPUs of their own. Consequently, a long-term perspective will be crucial to successfully invest in Nvidia, as its stock might not be able to replicate 2023's growth any time soon.$NVIDIA(NVDA.US)$ $Advanced Micro Devices(AMD.US)$
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