Have you heard of Nvidia (NASDAQ: NVDA)? They are the jewel of the stock market right now and for good reason. The company is hitting on all cylinders. But when a stock price endlessly rises, investors get nervous thinking it will soon reach its peak and then trend lower.
While this is a valid concern, it is not applicable to Nvidia. Why? Because this company has made the right moves to plant itself as a guaranteed performer for the next 10 years, at least.
Let’s dive into Nvidia and see what makes this company so amazing and why the stock price is only going to continue to rise.
Who Is Nvidia?
Nvida is a chip maker plain and simple. They make the processors that make computers run. But these processors aren’t your basic chips. These are high powered chips that are able to churn out massive amounts of power, allowing them to be used in many applications that lesser chips don’t stand a chance with.
And this is partly why Nvidia is special. They aren’t focused on making chips for a specific niche. By making high powered chips that can be used across many platforms, they increase their customer base.
For example, there are many high processing power applications that are on the horizon that will have an impact on the bottom line for Nvidia. This includes:
- Self driving cars
- Self driving trucks
- Self flying drones
- Artificial intelligence
- Automated warehouses
- Factory robots
These are just a few of the applications Nvidia chips can power. And these things are going to happen. They aren’t the pie in the sky ideas that will never make it to market. You will see these things come to market in the next 5-10 years.
But what about making money today? While the ideas presented above will help drive revenue for future years, the company needs an income source today.
Enter the cloud. The cloud market today is just over $100 billion. By 2026, it is expected to grow to over $500 billion. And guess who is providing the processing chips for the dominant players in the cloud market?
You guessed right if you said Nvidia. They provide chips for the cloud run by Amazon, Google, and Microsoft. Combined these 3 companies control over 75% of the cloud market.
And during the latest earnings release, the cloud segment for Nvidia saw revenues double compared to the prior year. So the current stock price is justified.
Speaking of earnings, overall earnings per share came in at $1.33, beating by $0.26. Revenues hit $2.6 billion, an increase of 32%. This marked the 7th straight quarter Nvidia grew revenues by at least 25%.
The Future For Nvidia
As noted, the company has a solid grasp on the processor industry. They are by far the leader of the pack. In fact, they resemble Intel in many ways from 20 years ago. Back then, Intel was a powerhouse company and the stock was a behemoth.
There is nothing that is going to slow down Nvidia at this point. They are growing their data center operations (cloud). They are the provider of chips for most of the new technology coming to market. And I haven’t even mentioned bitcoin yet.
If bitcoin continues to grow in users, guess what processors are powerful enough to mine for bitcoin? The answer once again is Nvidia.
I rarely say making money on a stock is guaranteed because things can and do happen. But Nvidia is doing every single thing right. They are positioned well for current and future growth and there is nothing that shows they cannot continue on this torrid pace of growth.
While a stock price of more than $200 might seem pricey, remember that its price is a reflection of where investors think it is headed. This is why Amazon is trading over $1,000 a share. It wouldn’t surprise me in 10 years if Nvidia is knocking on the door as well.
This author has no positions in any stock mentioned and does not plan to open any positions in any stocks mentioned for at least 72 hours after publication of this article.