Considering it’s up nearly 23,000% over the past ten years, Nvidia (NASDAQ: NVDA) has undoubtedly changed the lives of many investors. But is Nvidia stock still a millionaire maker?
The true engine behind the chipmaker’s ascent to the very top of the tech sector has been its focus on powering the rapidly expanding field of artificial intelligence (AI).
While no company can hope to maintain bewildering growth rates indefinitely, no matter how transformative its niche might be, Nvidia could still have a lot of room to run, perhaps enough to help more patient backers build seven-figure portfolios in the long run.
The key to Nvidia’s success
Most notably, Nvidia is still involved in every major phase of AI adoption. In fact, its chips dominate AI model training, despite some competition from Alphabet (NASDAQ: GOOGL) Tensor Processing Units (TPUs), and they are also essential for running the models in real-world applications.
Beyond data centers, Nvidia is expanding deeper into sectors like healthcare, automotive, and telecommunications, developing platforms tailored to industry-specific AI uses such as autonomous driving and advanced networking.
As AI is likely to have an impact on an even larger number of industries in the following years, Nvidia’s opportunity window is certain to widen, too. Accordingly, its trajectory is not solely dependent on selling chips but rather on diversified AI adoption.
High-profile partnerships are also a tailwind. Most recently, Nvidia struck a deal with Groq, another AI company, which is expected to boost the company’s growth next year thanks to a non-exclusive licensing agreement covering Groq’s inference technology.
Why Nvidia might still be a millionaire-maker stock
The Groq deal was analyzed as strategically meaningful for Nvidia, as it could potentially put to rest some investors’ worries regarding the above-mentioned TPUs.
“NVIDIA management has not made public comments on this agreement. Strategically we view that licensing an inference technology as important for NVIDIA. This would address concerns around Google’s TPU taking GPU market share as AI expands into the inference stage,” Rosenblatt Securities analyst Stacy Rasgon argued.
Still, traditional rivals like Advanced Micro Devices (NASDAQ: AMD) are pushing aggressively into AI chips, while others, like Amazon (NASDAQ: AMZN), are enjoying an ever greater appeal among retail investors.
Nonetheless, if performance improves and Nvidia manages to defend its position, adoption should naturally increase. The primary concern would be failures to deliver meaningful financial benefits if alternatives to established data center models, such as cloud solutions, prompt clients to reconsider their investments.
After all, nearly 90% of semiconductor manufacturer’s second-quarter revenue was closely tied to AI infrastructure demand, and that is not likely to change overnight. However, the firm is highly innovative, and its already strong position in the sector could allow it to put resources into emerging trends and capitalize on them. Confidence in this outcome is reflected in the fact that NVDA shares are rated a ‘Buy’ by 97% of investors.
Over time, these powerful new trends could continue to drive the stock higher. In other words, as part of a diversified, long-term portfolio, Nvidia still has the potential to be a true multimillionaire-maker for investors, provided it stays true to CEO Jensen Huang’s promise that innovation remains “the foundation of AI progress.”
Featured image via Shutterstock
