Nvidia (NVDA) is a great long-term opportunity for investors looking to capitalize on the growth of artificial intelligence (AI). The company has been at the forefront of AI technology and its stock price has reflected this, with shares up more than 200% over the past year. However, despite its impressive performance, Nvidia’s stock is currently trading at a premium valuation relative to other tech stocks.
Nvidia was founded in 1993 by Jensen Huang and Chris Malachowsky as an independent graphics processor manufacturer. Since then, it has become one of the world’s leading providers of computer hardware components used in gaming systems and high-performance computing applications such as deep learning and AI. In recent years, Nvidia has made significant investments into developing new technologies that leverage AI capabilities such as autonomous driving solutions, robotics platforms and cloud computing services.
The company’s success can be attributed to its focus on innovation within the field of AI technology. Its products are widely used across multiple industries including automotive, healthcare and finance which have all seen tremendous growth due to advancements in machine learning algorithms powered by GPUs from Nvidia. This demand for their products has resulted in strong revenue growth over time with revenues increasing from $2 billion USD in 2016 to nearly $11 billion USD last year – representing an annualized compound rate of 33%.
In addition to strong revenue growth, Nvidia also boasts impressive profitability metrics with operating margins consistently above 30%. This indicates that there is plenty of room for further margin expansion should they continue investing heavily into R&D initiatives related to AI development going forward. Furthermore, given their current market position within the industry they are well positioned for continued success even if competition increases or new entrants enter the space due to their established customer base and brand recognition among consumers worldwide.
Despite these positives however it must be noted that NVDA stock currently trades at a premium valuation compared to other tech stocks – making it difficult for investors who are looking for value plays right now but could still make sense as part of a longer term portfolio strategy focused on capitalizing on future trends within artificial intelligence markets globally . For example , while NVIDIA’s P/E ratio stands at around 50x , Apple Inc (AAPL) trades at just 22x earnings . Additionally , NVDA’s Price / Sales ratio stands at 15x versus Amazon Inc ‘ s 4x Price / Sales ratio . While these ratios may not necessarily reflect underlying fundamentals , they do provide insight into how richly valued NVDA is relative to other large cap tech companies .
All things considered , NVIDIA remains an attractive long-term investment opportunity given its leadership position within Artificial Intelligence markets globally . With strong revenue growth potential driven by increased adoption rates across multiple industries combined with healthy profit margins – investors should consider adding this name into their portfolios if they believe that Artificial Intelligence will remain relevant going forward . That being said though , caution should be exercised when considering buying shares today since it does trade at a relatively expensive valuation compared against peers
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