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So far, the advent of synthetic intelligence (AI) has put chipmaker Nvidia (NVDA 3. 46%) in the spotlight. And rightly so. After all, its hardware is the technology hub for most AI systems around the world. The company also offers similar software and solutions that make it the preferred choice in the industry.
Change, however, is inherent in the tech sector. Rivals constantly present competitive options. Every aspect of existing generation will eventually become obsolete or even replaced by incredible alternatives. So, which company is the next big decision in the AI industry?
In fact, it will most likely remain Nvidia for a long, long time. However, interested investors will possibly have to wait a bit before jumping into Nvidia stock.
Don’t misinterpret the message. Nvidia’s fastest-growth days are in the rearview mirror. Its annual profits have more than doubled in the past three years, while its percentage value has more than quintupled. Both are hard acts to follow. There’s a smart chance that Nvidia’s frothy percentages will give up much of those recent gains very soon as profit-making pressures mount.
Don’t panic if this happens. Instead, use any decent hindsight as a buying opportunity. There is no serious risk on the AI front, and the expansion of the AI market would arguably still be underestimated.
Each concept deserves a closer look.
Nvidia’s continued dominance in the synthetic intelligence market arguably wouldn’t be limited to its hardware.
It’s overlooked, but AI platforms also require software to work. Some developers code their own code, but Nvidia’s is designed in particular to meet the expressed desires of AI developers by taking full advantage of Nvidia’s purpose-built hardware. Its Triton software, for example, is optimized for inference: an AI term used to describe how an AI formula can achieve a desired conclusion on new data, based on what it has learned from older, already processed data.
Nvidia’s other competitive technological merit lies in some other component of AI platforms. It’s the networking of many, many AI processors in what is necessarily a single system. It’s not easy. However, with the acquisition of a company called Mellanox for $7 billion in 2019, Nvidia will offer its downstream knowledge consumers the ultra-fast interconnectivity that AI systems and calculations make possible.
In AI parlance, Nvidia offers a “complete” solution, which a customer can leverage for their entire AI platform.
What’s more important to investors is that either of those two underlying technologies is still one step ahead of the competition. It’s no exaggeration to recommend that average AI proficiency such as Advanced Micro Devices or Intel will never catch up with market-leading Nvidia.
However, Nvidia’s “full-stack” competitive advantage is only part of the reason why its stock can help you become a millionaire. The other detail of the bullish argument is the continued expansion of the AI market itself.
Perspectives vary from source to source. But most of the AI chip market’s expectations are in line with those of Precedence Research. The market research agency says the annual market for AI chips is poised to grow at an annualized rate of about 30% until 2032, when it will be valued at more than $200 billion a year.
And that’s just the hardware component of the deal. Precedence adds that the AI software market is most likely to grow from $170 billion last year to more than $1 trillion by 2032. This represents a compound annualized expansion rate of 23%, which also works. in favor of Nvidia by playing an important role in its hand.
However, this expected expansion would arguably still underestimate what lies beyond the horizon.
Although most people have a rudimentary understanding of the kinds of things AI can accomplish, it can be argued that its prospects are still underrated. Take, for example, the progression of new drugs. Once limited to theoretical possibilities, the tech giant fitness corporations are beginning to seriously tweak this idea.
Other promising uses of its AI generation come with the progression of autonomous robots or even AI-powered characters discovered in real virtual worlds. Mordor Intelligence predicts that the duration of the global robotics market will more than double through 2029, and Precedence Research has this outlook. Nvidia excels on both fronts.
Until now, robotics efforts have basically been used for video games. But last month, Nvidia unveiled a platform (called the Jetson Thor) designed in particular to help expand “general humanoid robots. “No other expander comes as close to creating such a comprehensive collection. of “embedded AI” robotic technologies such as Nvidia.
Nvidia is also bringing the pharmaceutical industry closer to the use of R
Connect the dots. Nvidia’s lead over its competition is enormous, and the growth of the AI industry itself continues to accelerate. Nvidia’s stock is, in fact, some of the most productive in one of the hottest markets. And that will be the case for a long, long time.
However, it wouldn’t be unreasonable to wait a bit before taking the plunge, just to see if the latest bullish generation of this exchange undergoes a correction. If not, so be it; Some sideways moves will still calm the overheated rally.
Don’t wait too long and don’t be too stingy if you’re hoping for a higher price. Remember, five years from now, you may not forget (or even care) if you have. It reached a low point. Plus, you’re buying corporations instead of stocks. If you decide on the right company, the name will eventually stand on its own.
James Brumley has no position in any of the stocks mentioned. The Motley Fool holds positions and recommends Advanced Micro Devices and Nvidia. The Motley Fool recommends Intel and recommends the following options: $57. 50 purchase in January 2023 at Intel, $45 purchase in January 2025 at Intel, and $47 short calls in May 2024 at Intel. The Motley Fool has a disclosure policy.
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