NVIDIA Stock is a Bet on the Future
I’ve been keeping an eye on NVIDIA Corporation (NASDAQ:NVDA) for quite some time. Over the last year, NVDA stock has surpassed other microchip makers by finding new applications for its cutting-edge technology.
The company dove headfirst into the future and, in doing so, escaped an industry-wide slump that ravaged most of the competition. That’s why NVIDIA stock jumped 178% even as its peers were crushed by economic and technical limitations.
All the usual criticisms of microchip makers—”Moore’s Law” is failing, personal computer (PC) sales are falling, there’s too much competition, etc.—don’t apply to NVDA stock. When it comes to high-tech graphics cards, this company is in a class of its own.
It has no legitimate competition.
I’ve heard talk of Advanced Micro Devices, Inc. (NASDAQ:AMD) posing a challenge to NVIDIA, but that’s like saying Canada poses a threat to the United States. Really? Canada is a lovely country with close proximity to the U.S., and it could even grow at a faster pace than the U.S., but that’s only because it starts from a lower base.
There’s a difference of scale that can’t be overcome. Whether it’s in population or economic output, Canada cannot hope to compete with the U.S. in nominal terms. Likewise, AMD cannot hope to beat NVIDIA.
Don’t get me wrong: I like AMD stock. It surged by triple digits last year, upgraded its suite of graphics cards, and signed a licensing deal in China. No one can accuse the stock of lackluster growth, but that doesn’t mean it can take down a beast like NVDA.
Don’t take my word for it though: the data is more convincing than I could ever be.
|YoY Revenue Growth||+9.02%||+23.9%|
|YoY Profit Growth||+138%||+873%|
At the end of the day, NVIDIA’s immense profitability gives it a firm edge over the competition. It’s no surprise that NVDA stock outperformed across the last 18 months, but the question is: are there any gains left for new shareholders?
Short answer: “yes”. The firm is moving past generic consumer electronics into more exciting fields like virtual reality and driverless cars. In fact, NVIDIA has already agreed to help Baidu Inc (ADR) (NASDAQ:BIDU) (a Chinese version of Google (Alphabet Inc (NASDAQ:GOOG)) in its quest to build a self-driving car.
The software will be provided by Baidu, while the hardware will come from NVIDIA. I have previously talked about my bullishness on driverless cars, so don’t be surprised that I think this is a positive step for the company.
More specifically, I like NVIDIA stock because it takes care of shareholders. Management actually cares about making profits (unlike some CEOs in the tech sector), and they even return profits directly to shareholders. NVDA stock comes with a 0.74% dividend yield, not to mention that the company is constantly buying back shares.
NVIDIA has spent billions of dollars on stock buybacks in the last few years, giving investors an added bonus for betting on the company. Everything the company touches turns to gold. In fact, a lot of people are using the firm’s “GeForce” chips in concert with a device that could be bigger than the “iPhone!” This is bound to be one of the most incredible investment stories of the next decade. Investors who opt in for this deal could become the next generation of overnight millionaires. Click here to read more.