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Globe and Mail
7 hours ago
- Business
- Globe and Mail
Why Is Wall Street Obsessed With AI (Artificial Intelligence) Leader Nvidia?
Key Points Nvidia has become one of the biggest success stories in investing. The company's brilliant moves will help it prosper for years to come. 10 stocks we like better than Nvidia › There's no two ways about it. Investors across the depth and breadth of Wall Street are absolutely captivated by Nvidia (NASDAQ: NVDA). The chipmaker is a frequent topic of discussion among financial programming anchors and analysts alike. There's more. Of the 66 analysts who offered an opinion in July, 88% say it's a buy or strong buy, and none recommend selling. There are plenty of reasons Wall Street is obsessed. Let's look at a few of those reasons and what they mean for investors. Paint by numbers Nvidia was already one of the world's most successful chip companies, a leading provider of graphics processing units (GPUs) that bring video games to life. Furthermore, Nvidia developed CUDA, a library of software tools that helps developers harness the raw, number-crunching power of GPUs for computationally intensive applications. This enabled data scientists and researchers to develop speedier algorithms, spurring the artificial intelligence (AI) revolution. That pivot to AI has led to eye-popping financial gains. For two successive years, Nvidia generated triple-digit year-over-year revenue and profit growth. At the same time, the stock price surged 638%, adding $3 trillion to its market cap. Since then, its growth has slowed but remains impressive nonetheless. In the company's fiscal 2026 first quarter (ended April 27), revenue of $44 billion jumped 69% year over year, while adjusted earnings per share (EPS) climbed 33%. Great news for investors As impressive as these results are, Nvidia's growth story is far from over, which is great news for investors. Sales of Nvidia's next-generation Blackwell AI-centric chips have recently started to ramp up, and CEO Jensen Huang is lobbying world leaders to develop their own sovereign AI programs. Furthermore, the chief executive's efforts in Washington, D.C., appear to be paying off, as the Trump administration is poised to approve the resumption of H20 chip sales to China, according to Huang. Wedbush analyst Dan Ives says it's "still the first inning for AI," which suggests there's much more opportunity ahead. That's why Wall Street is obsessed with Nvidia, and investors should be, too. Should you invest $1,000 in Nvidia right now? Before you buy stock in Nvidia, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Nvidia wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $652,133!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,056,790!* Now, it's worth noting Stock Advisor's total average return is 1,048% — a market-crushing outperformance compared to 180% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of July 15, 2025
Yahoo
7 hours ago
- Business
- Yahoo
Why Is Wall Street Obsessed With AI (Artificial Intelligence) Leader Nvidia?
Key Points Nvidia has become one of the biggest success stories in investing. The company's brilliant moves will help it prosper for years to come. 10 stocks we like better than Nvidia › There's no two ways about it. Investors across the depth and breadth of Wall Street are absolutely captivated by Nvidia (NASDAQ: NVDA). The chipmaker is a frequent topic of discussion among financial programming anchors and analysts alike. There's more. Of the 66 analysts who offered an opinion in July, 88% say it's a buy or strong buy, and none recommend selling. There are plenty of reasons Wall Street is obsessed. Let's look at a few of those reasons and what they mean for investors. Paint by numbers Nvidia was already one of the world's most successful chip companies, a leading provider of graphics processing units (GPUs) that bring video games to life. Furthermore, Nvidia developed CUDA, a library of software tools that helps developers harness the raw, number-crunching power of GPUs for computationally intensive applications. This enabled data scientists and researchers to develop speedier algorithms, spurring the artificial intelligence (AI) revolution. That pivot to AI has led to eye-popping financial gains. For two successive years, Nvidia generated triple-digit year-over-year revenue and profit growth. At the same time, the stock price surged 638%, adding $3 trillion to its market cap. Since then, its growth has slowed but remains impressive nonetheless. In the company's fiscal 2026 first quarter (ended April 27), revenue of $44 billion jumped 69% year over year, while adjusted earnings per share (EPS) climbed 33%. Great news for investors As impressive as these results are, Nvidia's growth story is far from over, which is great news for investors. Sales of Nvidia's next-generation Blackwell AI-centric chips have recently started to ramp up, and CEO Jensen Huang is lobbying world leaders to develop their own sovereign AI programs. Furthermore, the chief executive's efforts in Washington, D.C., appear to be paying off, as the Trump administration is poised to approve the resumption of H20 chip sales to China, according to Huang. Wedbush analyst Dan Ives says it's "still the first inning for AI," which suggests there's much more opportunity ahead. That's why Wall Street is obsessed with Nvidia, and investors should be, too. Should you invest $1,000 in Nvidia right now? Before you buy stock in Nvidia, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Nvidia wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $652,133!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,056,790!* Now, it's worth noting Stock Advisor's total average return is 1,048% — a market-crushing outperformance compared to 180% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of July 15, 2025 Danny Vena has positions in Nvidia. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy. Why Is Wall Street Obsessed With AI (Artificial Intelligence) Leader Nvidia? was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
2 days ago
- Business
- Yahoo
Nvidia stock hit an all-time high this week. But could it be a bargain, even now?
With a market capitalisation north of $4.2trn, chip company Nvidia (NASDAQ: NVDA) might not seem like an obvious bargain at first glance. Nvidia stock sells for 56 times earnings. Again, that does not necessarily sound like a screaming bargain. But Nvidia is no ordinary stock. The company recently became the most valuable listed business in history. The Nvidia stock price has risen 1,602% over the past five years. That is the sort of performance that many stock market investors dream of. However, am I too late to the party? Or could buying Nvidia stock for my portfolio even now potentially turn out to be a bargain when looking back a few years from now? Dramatic business improvement One of the difficulties in valuing Nvidia, whether one sees it as too pricy or a bargain, is the speed at which its business has grown in recent years. Last year, for example, revenues were $131trn. Five years before, they had been $11trn. Could it be that this is an exponential growth machine, so that even the current revenues might look comparatively small a few years from now? Or might it be that the recent years have seen a one-off boom in AI-led chip demand? And once that demand is fulfilled, will it fall away meaning Nvidia's revenues start getting much smaller? The answer to that question is critical, I reckon. If revenues fall significantly, earnings almost definitely will too. If earnings fall, the current Nvidia stock price could be too pricy. However, while revenue growth over the past five years has been incredible, earnings have been growing even faster. Last year's net income of $73bn compared to $3bn five years before. If AI heralds a permanent shift in chip demand and we are only in the early stages, that could be brilliant news for Nvidia. Economies of scale could mean that earnings growth outpace revenue growth, as happened in recent years. In that case, the current Nvidia stock price could yet turn out to be a bargain. Risky, but potentially rewarding What will happen? We do not know. What is clear, however, is that Nvidia has significant strengths that could help it keep doing well if chip demand remains buoyant. They include proprietary chip designs, a world-class workforce, strong brand, and established relationships with a large roster of existing clients. Those things all strike me as strengths and help explain why, at the right valuation, I would certainly be happy to add Nvidia to my portfolio. The question I wrestle with is whether the current valuation feels right to me. It does not, which is why I will not be adding Nvidia stock to my portfolio for now. For the reasons I outlined above, I see a strong case for the share to keep soaring in coming years. But that largely depends on the outlook for chip demand. That remains uncertain. Tariff disputes and growing competition could also eat into Nvidia's profitability. I do not think those risks are properly reflected in the current share price. The post Nvidia stock hit an all-time high this week. But could it be a bargain, even now? appeared first on The Motley Fool UK. More reading 5 Stocks For Trying To Build Wealth After 50 One Top Growth Stock from the Motley Fool C Ruane has no position in any of the shares mentioned. The Motley Fool UK has recommended Nvidia. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. Motley Fool UK 2025 Sign in to access your portfolio
Yahoo
3 days ago
- Automotive
- Yahoo
Nvidia Rally Shows Signs of Overheating as Gains Blow Past 80%
(Bloomberg) -- Nvidia Corp. traders keep getting reasons to buy the stock, but the breakneck rally is showing signs of overheating. The Dutch Intersection Is Coming to Save Your Life Advocates Fear US Agents Are Using 'Wellness Checks' on Children as a Prelude to Arrests Mumbai Facelift Is Inspired by 200-Year-Old New York Blueprint LA Homelessness Drops for Second Year Manhattan, Chicago Murder Rates Drop in 2025, Officials Say The chipmaker's 14-day relative strength index topped 80 on Friday, the highest since June 2024 when the stock dropped more than 20% over the following six weeks. The momentum gauge tracks the speed of a stock's recent price changes and a reading over 70 is a signal to some analysts that buying is at extreme levels. 'It's definitely getting overbought, and while that doesn't mean a reversal is imminent, this is something to be mindful of,' said Jonathan Krinsky, chief market technician at BTIG. 'It feels like sentiment, which had been optimistic, is getting borderline giddy.' Nvidia, which dominates the market for chips used in artificial intelligence computing, has staged a dramatic reversal since April when a broad tariff-induced selloff added to fears about a potential pullback in AI spending. Since then, the firm's biggest customers have continued to plow more money into the development of AI services and investors have flocked back to the stock, pushing it up 84% in less than four months. The latest leg of the rally has been driven by news that Nvidia plans to resume sales of some AI chips in China with the approval of the US government. The policy reversal from President Donald Trump's administration could help recover a large chunk of the $15 billion in Nvidia's fiscal 2026 data center revenue that had been at risk from US chip export restrictions, according to Bloomberg Intelligence analyst Kunjan Sobhani. This week, Trump also touted more than $92 billion in commitments to invest in AI and energy infrastructure, while Meta Platforms Inc. CEO Mark Zuckerberg affirmed plans to spend 'hundreds of billions of dollars' on data center investments. The Facebook parent is Nvidia's second-largest customer, after Microsoft Corp., according to supply chain data compiled by Bloomberg. Nvidia is on track for its eighth-straight week of gains and the rally from its April low has added roughly $1.9 trillion to its market value, a figure that alone exceeds the market capitalization of Meta. At more than $4.2 trillion, Nvidia is again the world's most valuable company, topping second-ranked Microsoft by about $400 billion. 'Clearly, momentum is behind it,' said James Abate, managing director and head of fundamental strategies at Horizon Investments. 'It seems like every time we get incremental good news, buyers rush in and we get another leg up in the stock.' Still, Abate has used the advance to sell some Nvidia shares. In addition to the rising valuation, he said he's concerned that investors are underestimating the potential for 'the future cyclicality of the AI business.' Nvidia is priced at 34 times earnings expected over the next 12 months, up from a low of less than 20 in April, but well below the average of about 40 over the past five years. Most on Wall Street remain bullish about Nvidia's prospects on increasing positive signs about AI demand, including a robust forecast from Taiwan Semiconductor Manufacturing Co. on Thursday. Of the 79 analysts tracked by Bloomberg that cover the company, just one has a sell recommendation, while nine rate the stock neutral. Investors will be paying close attention in coming weeks to earnings results from Big Tech companies for hints about capital spending plans. Alphabet Inc. is scheduled to report on July 23, followed by Microsoft and Meta on July 30. Those three companies and Inc. account for more than 40% of revenue for Nvidia, whose results are due in late August. Rhys Williams, chief strategist at Wayve Capital Management, sees no reason to take profits on Nvidia with all signs pointing to AI spending continuing. 'Nvidia has had a nice breakout, and it will need to have a good quarter and raise its outlook, but we expect that will happen,' Williams said. 'We probably have another year or two of strong data-center growth.' Top Tech Stories While rival media companies are unloading assets and cutting costs, Netflix Inc. continues to thrive. The owner of the world's most popular paid streaming service on Thursday reported second-quarter results that exceeded investor expectations in every major metric, saying revenue grew to $11.1 billion and earnings jumped to $7.19 a share. The company also raised its forecast for full-year sales and profit margins. Days after a White House meeting with President Donald Trump, Jensen Huang was being hailed by an audience on a stage in Beijing. Meta Platforms Inc. hired a pair of key artificial intelligence researchers who worked at Apple Inc., shortly after poaching their former boss from the iPhone maker. Perplexity AI Inc., whose artificial intelligence-powered search engine competes with Google, has raised fresh capital in a deal that values the startup at $18 billion, according to a person familiar with the matter. Taiwan Semiconductor Manufacturing Co. plans to be cautious with capital expenditure due to tariff-related uncertainties, according to Chief Financial Officer Wendell Huang. Earnings Due Friday No major earnings expected --With assistance from Matt Turner and Subrat Patnaik. (Updates RSI data in second paragraph, share gain in fourth paragraph.) 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Yahoo
3 days ago
- Business
- Yahoo
Alibaba (BABA) Soars 8% on US Chip Exports Ease to China
We recently published . Alibaba Group Holding Limited (NYSE:BABA) is one of Tuesday's top performers. Alibaba grew its share prices for a fourth straight day on Tuesday, jumping 8.09 percent to close at $116.97 apiece, as investor sentiment was buoyed by the improving relations between China and the US amid the latter's recent move to ease up on chip exports. Alibaba Group Holding Limited (NYSE:BABA) traded higher alongside its Chinese counterparts after the US gave the green light for Nvidia Corp. to resume selling H20 AI chips to China. Alibaba Group Holding Limited (NYSE:BABA)—a China-based technology company specializing in e-commerce—stands to benefit from the move, particularly through its cloud computing subsidiary Alibaba Cloud—one of the several Chinese firms that heavily relied on H20 chips. An e-commerce platform displaying a wide range of products to customers online. More broadly, the US' move signaled easing trade tensions between the two countries and sparked more confidence for Chinese firms pursuing technology investments and infrastructure expansion. While we acknowledge the potential of BABA as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an extremely cheap AI stock that is also a major beneficiary of Trump tariffs and onshoring, see our free report on the . READ NEXT: 30 Stocks That Should Double in 3 Years and 11 Hidden AI Stocks to Buy Right Now. Disclosure: None. This article is originally published at Insider Monkey. Sign in to access your portfolio
