Nvidia‘s (NASDAQ: NVDA) earnings have already been climbing in the triple digits — and that’s led to mind-boggling stock performance. Shares of the technology giant have soared 2,500% over the past five years. And even though stock performance has slowed in recent weeks, the shares have still advanced about 120% since the start of this year.
The reason for this growth is simple: Nvidia has secured itself a major position in one of today’s hottest growth markets: artificial intelligence (AI). The company holds 80% of the AI chip market thanks to the tremendous performance of its graphics processing units (GPUs). These chips power key AI tasks, such as the training and inference of large language models (LLMs).
Now, as other chip companies launch products to rival Nvidia’s top chip, some investors wonder whether Nvidia’s biggest wave of growth is over. But my prediction is that one thing in particular will be Nvidia’s biggest growth driver yet — and it’s right around the corner. Let’s find out more.
Nvidia and AI
First, a quick note on Nvidia’s path to this point. Several years ago, the company was a giant in the video games market, with its GPUs bringing games to life on the screen for players. It became clear, though, that Nvidia’s GPUs could be valuable across industries for many uses — particularly AI. The tech company decided to focus on this high-growth industry, designing GPUs for those building AI platforms.
And Nvidia didn’t stop at GPUs. The company has designed a whole ecosystem of products and services for AI, making it the go-to provider for top chips and more. Market giants, such as Meta Platforms and Tesla, are major customers. In Tesla’s recent earnings call, CEO Elon Musk said, “I’m incredibly impressed by Nvidia’s execution and the capability of their hardware. And what we are seeing is that the demand for Nvidia hardware is so high that it’s often difficult to get the GPUs.”
So, it’s clear that Nvidia’s growth is far from over. But can it actually get even stronger? I think so, and what could spur this next era of even more growth is the company’s upcoming release of the Blackwell architecture and chip.
The Blackwell architecture includes six transformative technologies, from being the most powerful chip yet to features offering higher security, reliability, and top performance in data analytics. In Nvidia’s first-quarter earnings report, the company said Blackwell was in full production — and the goal was to make it globally available later this year. At that point, similar to Elon Musk’s recent words about Nvidia GPUs, the company said demand was surpassing supply. Nvidia expects this trend to continue next year, too.
Though Nvidia is constantly working to deliver its GPUs to those who need them, CEO Jensen Huang has emphasized the difficulty of addressing such a high need.
“A lot” of Blackwell revenue
All of this suggests Nvidia’s growth is far from over. And that Blackwell offers such improvements in performance — for example, allowing companies to run generative AI on LLMs at as much as 25 times less cost and energy consumption than its predecessor — signals growth could be set to take off. Nvidia’s Huang says the company expects to see “a lot” of revenue from Blackwell this year.
So, what does this mean for investors? Nvidia shares aren’t cheap, trading at 39 times forward earnings estimates, but considering Nvidia’s track record and the upcoming Blackwell launch, this valuation is reasonable. Even if Nvidia shares don’t soar immediately, it’s clear there’s a lot of gas in this tank to power gains over the long term.
I predict that Blackwell will be the key to Nvidia’s next era of massive growth — and it’s worth sticking around or getting in on the stock’s recent dip to potentially benefit from this exciting story.
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Prediction: This 1 Thing Will Be Nvidia’s Biggest Growth Driver Yet was originally published by The Motley Fool
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