Is Nvidia a good investment? Experts predict years of growth ahead
Jensen Huang, Nvidia's chief executive, was taken to dinner at Nobu Palo Alto by Ellison and Elon Musk, the world's richest man, in September.
'I would describe the dinner as Oracle, me and Elon begging Jensen for GPUs,' Ellison later told analysts. 'Please take our money. Please take our money. By the way, I got dinner. No, no, take more of it. We need you to take more of our money please.'
Nvidia has positioned itself as the most important supplier in the artificial intelligence revolution. The maker of graphics processing units, first developed for video gaming, has recorded extraordinary results since the public launch of ChatGPT in late 2022, which broadened the use case for its chips and triggered a wave of investment in AI infrastructure.
Demand for Nvidia's chips leaped, with sales led by its H100 chip design, which can be used to run the large-language models that power generative AI programs such as ChatGPT.
The technology propelled Nvidia's valuation above $1 trillion for the first time in June 2023. Last year, it raced past the $2 trillion and $3 trillion milestones in February and June, respectively.
On Wednesday its valuation surpassed $4 trillion in intraday trading, the first time any public company had done so.
Investors have shaken off worries from January when Deepseek, a Chinese artificial intelligence start-up, said it was even more efficient than OpenAI, the owner of ChatGPT, and had tech that was just as powerful but ran on fewer chips.
Huang has dismissed concerns about chip demand, arguing that, instead of slowing down, demand for computing power to handle reasoning and agentic AI applications — which have more decision-making power and autonomy — will be higher than anticipated.
• Why rivals can't compete with Nvidia's chips for everything
'The amount of computation we need at this point as a result of agentic AI, as a result of reasoning, is easily a hundred times more than we thought we needed this time last year,' he said in March.
Big tech companies including Microsoft, Amazon, Alphabet and Meta Platforms have remained committed to investing billions of dollars to build expensive AI networks.
This week, Bernstein research estimated that total investment in planned new data centres driven by AI demand had risen to $750 billion — a positive signal for Nvidia, which offers the full computing 'stack' required for AI, including hardware systems and the software needed to optimise their performance.
Nvidia continues to innovate with more powerful chips that can perform the complex tasks required by generative AI platforms. The Hopper H100 is being replaced by the Blackwell range, which allows two and a half times Hopper's performance in training AI, according to Nvidia.
In the first quarter to April 27, Nvidia reported revenue of $44.06 billion, up 69 per cent on the year and beating estimates of $43.3 billion. Net income rose 26 per cent to $18.8 billion, beating estimates of $18.2 billion.
Analysts expect Nvidia to report sales of $45.6 billion for the second quarter, up 52 per cent on the same period last year. Net income is forecast to rise 47 per cent to $24.4 billion.
• Jensen Huang: the rise and rage of Nvidia's visionary billionaire
Nvidia was forced to write off inventory earmarked for China in April when the Trump administration put export limits on its H20 chip, designed specifically for the Chinese market. The company said the new restrictions would result in $5.5 billion in charges. The charges meant that Nvidia's profit margin fell from 73 per cent to a still impressive 60.5 per cent in the last quarter.
Bullish analysts believe Nvidia can continue to grow by expanding in other markets.
Atif Malik, an analyst at Citi, raised his price target for Nvidia stock to $190 from $180 this week, citing higher demand from sovereign countries for AI, as governments invest heavily in the technology. Malik expects sovereign AI demand to drive the total addressable market for data-centre semiconductor AI to more than half a trillion dollars by 2028.
Nvidia's earnings multiple has already deflated from two years ago, when it peaked at 209 in July 2023. It has since fallen to 53.
At some point demand for GPUs will start to become saturated. However, semiconductor experts believe there will be several years of more growth ahead.
Jon Peddie, a former Nvidia adviser, said: 'There'll be a levelling off once enough people get enough GPUs, but I think that won't be for quite a while. Our guesstimate is that we've still got two to three years of ridiculous growth ahead of us, and then it's going to roll off, but roll off slowly.'
Investors should expect more volatility driven by geopolitics, tariffs and product transitions. However, over time the chip designer's sales and shares should continue to rise.Advice: HoldWhy: Nvidia's growth story still has room to run.
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Reuters
17 minutes ago
- Reuters
Karen Hao on how the AI boom became a new imperial frontier
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This critique stands in stark contrast to the vision promoted by industry leaders like Altman (who declined to participate in Hao's book), who portray AI as a tool for human advancement — from boosting productivity to improving healthcare. Empires, Hao contends, cloaked their conquests in the language of progress too. The following conversation has been edited for length and clarity. Reuters: Can you tell us how you came to the AI beat? Karen Hao: I studied mechanical engineering at MIT, and I originally thought I was going to work in the tech industry. But I quickly realized once I went to Silicon Valley that it was not necessarily the place I wanted to stay because the incentive structures made it such that it was really hard to develop technology in the public interest. Ultimately, the things I was interested in — like building technology that facilitates sustainability and creates a more sustainable and equitable future — were not things that were profitable endeavors. So I went into journalism to cover the issues that I cared about and ultimately started covering tech and AI. That work has culminated in your new book 'Empire of AI.' What story were you hoping to tell? Once I started covering AI, I realized that it was a microcosm of all of the things that I wanted to explore: how technology affects society, how people interface with it, the incentives (and) misaligned incentives within Silicon Valley. I was very lucky in getting to observe AI and also OpenAI before everyone had their ChatGPT moment, and I wanted to add more context to that moment that everyone experienced and show them this technology comes from a specific place. It comes from a specific group of people and to understand its trajectory and how it's going to impact us in the future. And, in fact, the human choices that have shaped ChatGPT and Generative AI today (are) something that we should be alarmed by and we collectively have a role to play in starting to shape technology. 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Geeky Gadgets
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The Independent
25 minutes ago
- The Independent
DOGE sprouts in red states, as governors embrace the cost-cutter brand and make it their own
The brash and chaotic first days of President Donald Trump 's Department of Government Efficiency, once led by the world's richest man Elon Musk, spawned state-level DOGE mimicry as Republican governors and lawmakers aim to show they are in step with their party's leader. Governors have always made political hay out of slashing waste or taming bureaucracy, but DOGE has, in some ways, raised the stakes for them to show that they are zealously committed to cutting costs. Many drive home the point that they have always been focused on cutting government, even if they're not conducting mass layoffs. 'I like to say we were doing DOGE before DOGE was a thing,' Iowa Gov. Kim Reynolds said in announcing her own task force in January. Critics agree that some of these initiatives are nothing new and suggest they are wasteful, essentially duplicating built-in processes that are normally the domain of legislative committees or independent state auditors. At the same time, some governors are using their DOGE vehicles to take aim at GOP targets of the moment, such as welfare programs or diversity, equity and inclusion programs. And some governors who might be eyeing a White House run in 2028 are rebranding their cost-cutting initiatives as DOGE, perhaps eager to claim the mantle of the most DOGE of them all. No chainsaws in the states At least 26 states have initiated DOGE-style efforts of varying kinds, according to the Economic Policy Institute based in Washington, D.C. Most DOGE efforts were carried out through a governor's order — including by governors in Florida, Iowa, Louisiana, Montana, New Hampshire and Oklahoma — or by lawmakers introducing legislation or creating a legislative committee. The state initiatives have a markedly different character than Trump's slash-and-burn approach, symbolized by Musk's chainsaw-brandishing appearance at a Conservative Political Action Committee appearance in February. Governors are tending to entrust their DOGE bureaus to loyalists, rather than independent auditors, and are often employing what could be yearslong processes to consolidate procurement, modernize information technology systems, introduce AI tools, repeal regulations or reduce car fleets, office leases or worker headcounts through attrition. Steve Slivinski, a senior fellow at the libertarian Cato Institute who researches state government regulatory structures, said that a lot of what he has seen from state-level DOGE initiatives are the 'same stuff you do on a pretty regular basis anyway' in state governments. States typically have routine auditing procedures and the ways states have of saving money are 'relatively unsexy," Slivinski said. And while the state-level DOGE vehicles might be useful over time in finding marginal improvements, "branding it DOGE is more of a press op rather than anything new or substantially different than what they usually do,' Slivinski said. Analysts at the pro-labor Economic Policy Institute say that governors and lawmakers, primarily in the South and Midwest, are using DOGE to breathe new life into long-term agendas to consolidate power away from state agencies and civil servants, dismantle public services and benefit insiders and privatization advocates. 'It's not actually about cutting costs because of some fiscal responsibility,' EPI analyst Nina Mast said. Governors promoting spending cuts Louisiana Gov. Jeff Landry rebranded his 'Fiscal Responsibility Program' as Louisiana DOGE, and promoted it as the first to team up with the federal government to scrub illegitimate enrollees from welfare programs. It has already netted $70 million in savings in the Medicaid program in an 'unprecedented' coordination, Landry said in June. In Oklahoma, Gov. Kevin Stitt — who says in a blurb on the Oklahoma DOGE website that 'I've been DOGE-ing in Oklahoma since before it was cool" — made a DOGE splash with the first report by his Division of Government Efficiency by declaring that the state would refuse some $157 million in federal public health grants. The biggest chunk of that was $132 million intended to support epidemiology and laboratory capacity to control infectious disease outbreaks. The Stitt administration said that funding — about one-third of the total over an eight-year period — exceeded the amount needed. The left-leaning Oklahoma Policy Institute questioned the wisdom of that, pointing to rising numbers of measles and whooping cough cases and the rocky transition under Stitt of the state's public health lab from Oklahoma City to Stillwater. Oklahoma Democrats issued rebukes, citing Oklahoma's lousy public health rankings. 'This isn't leadership,' state Sen. Carri Hicks said. 'It's negligence." Stitt's Oklahoma DOGE has otherwise recommended changes in federal law to save money, opened up the suggestion box to state employees and members of the general public and posted a spreadsheet online with cost savings initiatives in his administration. Those include things as mundane as agencies going paperless, refinancing bonds, buying automated lawn mowers for the Capitol grounds or eliminating a fax machine line in the State Board of Licensure for Professional Engineers and Surveyors. Florida Gov. Ron DeSantis signed an executive order in February creating a task force of DOGE teams in each state agency. In the order, DeSantis recited 10 points on what he described as his and Florida's 'history of prudent fiscal management' even before DOGE. Among other things, DeSantis vowed to scrutinize spending by state universities and municipal and county governments — including on DEI initiatives — at a time when DeSantis is pushing to abolish the property taxes that predominantly fund local governments. His administration has since issued letters to universities and governments requesting reams of information and received a blessing from lawmakers, who passed legislation authorizing the inquiry and imposing fines for entities that don't respond. After the June 30 signing ceremony, DeSantis declared on social media: 'We now have full authority to DOGE local governments.' In Arkansas, Gov. Sarah Huckabee Sanders launched her cost-cutting Arkansas Forward last year, before DOGE, and later said the state had done the 'same thing' as DOGE. Her administration spent much of 2024 compiling a 97-page report that listed hundreds of ways to possibly save $300 million inside a $6.5 billion budget. Achieving that savings — largely by standardizing information technology and purchasing — would sometimes require up-front spending and take years to realize savings. ___
