Will Artificial Intelligence (AI) Allow Nvidia to Crush Apple and Microsoft, and Become the Most Valuable “Magnificent Seven” Stock?

Nvidia (NASDAQ: NVDA) has emerged as the hottest player in the artificial intelligence (AI) space. Its cutting-edge graphics processing units (GPUs) are the most important hardware element of the servers that run advanced AI applications.

In the particularly high-margin category of GPUs tailored to run AI and other accelerated computing applications, Nvidia currently commands roughly 90% of the market. While competitors, including Advanced Micro Devices and Intel, are making moves to ramp up their capabilities in the ultra-high-performance GPU space, many analysts expect Nvidia to retain its incredible strength in the category.

With incredible performances behind it and management guiding for further explosive growth, Nvidia stock has risen by 240% over the last year and is up 82% so far in 2024.

These gains have pushed Nvidia’s market cap to roughly $2.27 trillion. It now ranks as the world’s third-most valuable company and the third-most valuable member of the “Magnificent Seven.” Apple, currently sitting in second place, has a market cap of $2.65 trillion, while top dog Microsoft is valued at approximately $3.12 trillion.

Could Nvidia soon be the world’s most valuable company?

AI’s most influential player is reaping the rewards

Starting late in 2022, incredible leaps forward in artificial intelligence technologies began to emerge at a rapid pace. That progress ramped up dramatically in 2023, and it has shown no sign of slowing down this year.

As businesses and institutions have made moves to gain exposure to the AI space, demand has soared for Nvidia’s most advanced processors. Its sales and earnings have shot through the roof.

In last year’s fourth quarter, the company’s sales grew 265% year over year to $22.16 billion. Thanks to dramatic performance acceleration in 2023’s second half, Nvidia’s annual sales increased by 126% to $60.9 billion.

NVDA Net Income (TTM) Chart

Nvidia posted $29.76 billion in net income last year — equal to 49% of its total sales. That’s an incredible net income margin for a hardware-oriented business; those often have lower margins…

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