Why NVDA Stock Can Continue to Soar
I try not to play favorites, but NVIDIA Corporation (NASDAQ:NVDA) makes it so difficult. My bullishness on the stock was vindicated last year, as the share price tripled from $46.53 to $149.60. The year before, NVDA stock more than doubled.
It’s been an unbelievable ride.
However, I’m not ready to call it quits. The trends driving the NVIDIA stock price are far from finished, suggesting that 2017 and 2018 could be as lucrative as the years that preceded them.
It can be hard to spot these trends, not least because the semiconductor industry is highly technical. But that doesn’t mean you have to suffer in ignorance.
Just look at how NVIDIA’s technology is applied. These new products and services are things that make the front page everyday.
Moreover, these applications share a common cause: Artificial Intelligence, or as I like to call it, NVIDIA’s “brain” microchips.
The genius of NVIDIA’s microchips is that they make all devices smarter. From cars to smart home devices, there is a desperate need for “brain” chips to bring AI technology to life. You can tell that the market is starting to acknowledge this emerging tech because NVDA stock is up 206% from a year ago!
There are three applications that I find important. You’ve probably heard of each one before, but it’s worth delving into why NVIDIA is so pivotal to them, and how much further they have yet to expand.
Driverless Cars: A $2.0 Trillion Industry That NVIDIA Dominates
NVIDIA’s patented “brain” technology help cars “see” their surroundings and “learn” from incoming data. Analysts estimate the potential market size at roughly $2.0 trillion, meaning there is enormous money at stake.
One of the competitive points is how quickly self-driving cars can learn. The average system takes two full years to calibrate, but NVIDIA’s on-board computer can achieve similar results in a mere four hours.
No wonder 80 automakers are already using NVIDIA’s “brain” technology! And that’s including Tesla Inc (NASDAQ:TSLA)!
NVIDIA’s speedy uptake can facilitate our transition to a driverless car society, which experts say will reduce car fatalities, traffic congestion, and the cost of car ownership. With so many carmakers competing in this space, it can be difficult to know where to park your money.
I personally think NVIDIA is the best play because no matter which car company wins this market, NVIDIA is likely to be their supplier.
Smart Home Devices: NVIDIA Has the “Most Powerful Media Streamer Today”
Amazon.com, Inc. (NASDAQ:AMZN) sold 8.2 million of its “Echo” devices since 2014. Google is getting in on the action with its “Google Home” voice-controlled speaker, which is expected to outsell the Echo by 2020. Both of these are essentially command nodes for your entire house.
The idea is that (sooner or later) all household items will be wirelessly connected.
Smart home devices like the Echo and Home give you a way to switch on your television by saying a simple command aloud, or else activate your coffee maker so it can make you a cup of joe.
It a rapidly growing market, but one still young enough to experience a few more twists. For instance, NVIDIA sells a streaming device that plugs straight into your television. The main purpose of a streaming device is to beam movies and TV shows into your living room. (Source: “Nvidia SHIELD review: the most powerful media streamer today,” T3, October 1, 2015.)
Sounds fairly normal right?
Except that NVIDIA has other ideas. It is combining the “brain” in smart home technology with streaming boxes, leading to a powerful new point of access for Internet of Things (IoT) enabled tech. Users can buy small, inexpensive remote devices that plug into power outlets, thus extending the ability of the device to “hear” your commands.
One such device is the upcoming “NVIDIA Spot” that works in tandem with the “NVIDIA SHIELD,” allowing users to control their smart-home setup from any location. (Source: “NVIDIA Spot,” NVIDIA Corporation, last accessed June 12, 2017.)
Considering that four out of every 10 American households have one of these streaming devices, it is safe to say NVIDIA has a leg up on the competition. So don’t let anyone tell you this is a niche trend. It is definitely mainstream, and it can definitely send NVDA stock soaring.
Netflix-for-Gaming: Perhaps the Biggest Tailwind Yet
Since NVIDIA’s microchips are popular with gamers, the company launched a video-game platform similar (in structure) to Netflix, Inc. (NASDAQ:NFLX).
Users pay a flat fee for unlimited access to games, much like Netflix’s users pay for unlimited access to movies and TV shows. It’s not the most original idea—others have thought of it before.
However, all of them failed because games are incredibly complex information packages. Transmitting them smoothly, without lag times and data loss is a complicated task, and none of the other firms could crack it. But then again, none of them had NVIDIA’s “brain” technology.
It’s hard to overstate how much this technology raises NVDA stock’s potential. For the first time ever, it is possible to run a Netflix-for-gaming platform! For a mere $7.99 a month, users can play unlimited video games. (Source: “THE POWER OF CLOUD GAMING,” NVIDIA Corporation, last accessed June 12, 2017.)
They won’t have to spend ridiculous amounts of money on new consoles (upwards of $300.00) or individual games (upwards of $40.00). NVIDIA’s gaming platform is being hailed as “nirvana for the gamer,” and it’s all in the cloud.
There is no doubt in my mind that this idea could send NVDA stock to the moon.
NVIDIA stock has just about everything going in its favor. Broad technological trends, the right applications, a history of triple-digit gains…it is as close to the perfect investment as I can imagine.
And while I’m sure it will one day reach maturity and flat line, that day is not today. The company is simply too well positioned in too many prominent markets. That reasoning keeps me bullish on NVDA stock, and I happen to think it is pretty solid. Only time and a bit of luck can prove me right.