5 Stocks That’ll Be Worth More Than Artificial Intelligence (AI) Stock Nvidia 3 Years From Now

Over the last 30 years, no next-big-thing trend or innovation has come close to rivaling the advent of the internet. However, artificial intelligence (AI) has the potential to do for businesses in this generation what the internet did for corporate America three decades ago.

By the turn of the decade, analysts at PwC foresee AI, which relies on software and systems in place of human oversight, increasing global gross domestic product by $15.7 trillion. No company has more directly benefited from the AI revolution than semiconductor stock Nvidia (NASDAQ: NVDA).

Image source: Getty Images.

Nvidia’s stock may be in a bubble

Over the span of 15 months, Nvidia’s valuation has soared by $1.9 trillion to $2.26 trillion, which ranks behind only Microsoft and Apple among publicly traded companies in the U.S.

Nvidia’s outperformance is a reflection of the overwhelming demand for its high-powered A100 and H100 graphics processing units (GPUs). Some analysts believe Nvidia’s top-tier chips could account for more than 90% of the GPUs deployed in AI-accelerated data centers this year. The early stage scarcity associated with these chips has afforded Nvidia exceptional pricing power.

But there are also plenty of reasons to believe Nvidia is in a bubble.

For example, every next-big-thing trend and innovation over the last three decades has worked its way through an early stage bubble. Investors have a habit of overestimating the adoption of new technology, and I don’t anticipate AI being the exception.

Nvidia is also likely to see its pricing power wane in the quarters to come as new competitors enter the space and the company’s own production reduces the scarcity of AI-GPUs. The bulk of Nvidia’s 217% data-center sales growth in fiscal 2024 (ended Jan. 28, 2024) can be traced to its pricing power.

The chief concern might just be that its top four customers, which are “Magnificent Seven” constituents and comprise roughly 40% of its sales, are all developing in-house AI chips for their data centers. One way or another, Nvidia’s orders from its top customers are liable to taper off in…

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