NVIDIA Has Earned a Spot as One of the Top Emerging Tech Stocks
NVIDIA Corporation (NASDAQ:NVDA), a maker of graphics-enhancing chips for personal computers (PCs), has enjoyed a surge in demand. It posted better-than-expected quarterly results, and it expects even better ones ahead.
It’s no wonder that NVDA stock surged almost 25% on Wall Street. So much for the doomsayers who were warning that Donald Trump’s election would have a bearish effect on the markets.
NVDA stock went from $67.77 to $84.85 at market open on November 10. Two simple facts suggest that the bullish trend has long legs for NVIDIA stock. The most evident is that, after the post-earnings surprise rally on Friday, NVDA stock continued to rise steadily throughout the day. The second is that its competitor, Advanced Micro Devices, Inc. (NASDAQ:AMD), also moved up, gaining five percent.
Even if AMD stock has not performed as well as NVIDIA, both companies’ quarterly results suggest that market demand for their products means they have strong potential. The numbers have spoken loudly: NVIDIA raked in 54% more revenue in the third quarter of fiscal 2017 than in the same period a year ago. At $2.0 billion, the company trounced analysts’ expectations of $1.69 billion. NVIDIA projects even higher revenues of $2.10 billion.
NVIDIA offered concrete evidence of confidence in its ability to deliver more consensus-beating results ahead. The company increased its quarterly dividend to $0.14 per share. It also bought back $2.0 billion worth of shares. At this point, NVDA stock could glide its way to $100.00 way sooner than anybody expected. The company has the demand and the technology to fulfill it.
If anyone were compiling a list of the top emerging tech stocks in 2016 and 2017, NVIDIA would be a strong contender for inclusion. NVIDIA stock has long been a sleeper, but investors have probably (and suddenly) grown aware of its potential. Indeed, the recent results are not the result of chance or luck. NVDA stock has grown steadily, and was hot six months—or even a year—ago.
NVIDIA Has a Chance to Deliver Colossal Revenues in 2017: Here’s Why
The driver is the demand for graphics processing units (GPU) and graphics cards. These are important components in enhancing gaming hardware. Nintendo Co., Ltd’s new “Switch” gaming console could encourage a whole new video-game design war, boosting demand for NVIDIA’s products. But, concentration and reliance on a single demand presents too many risks.
NVIDIA has already shifted away from this model, targeting other segments of the technology industry. One of the most bullish sources of long-term evolving demand is the automotive industry. The speed with which just about all major auto manufacturers have responded to the driverless, or autonomous driving, technology of Tesla Motors Inc (NASDAQ:TSLA) or Alphabet Inc (NASDAQ:GOOG) has surprised both analysts and drivers.
Self-driving systems are the new must-have option for car buyers. By self-driving, don’t think exclusively of the full-on systems featured in the expensive Tesla “Model S” or the Alphabet “Google” car. More mundane technologies from lane assist, to emergency auto-braking and reversing, for example, need the kinds of processors that NVIDIA makes. Consider that self-driving tech is still in its infancy, and that the industry has just started to adapt, and you should get an idea of the types of gains that NVIDIA could expect.
NVIDIA recently unveiled “Xavier,” a new artificial intelligence (AI) supercomputer that enhances driverless car technology. It runs HD cameras, light detection and ranging (LIDAR)—which helps establish distance—and radar. These are the fundamentals of self-driving cars. (Source: “Nvidia will power driverless cars with Xavier AI,” ITPRO, September 28, 2016.)
Self-driving systems will drive NVIDIA’s returns in the medium and longer terms. Meanwhile, NVIDIA’s gaming GPUs have already started to deliver welcome returns to investors. NVDA stock at $100.00 seemed like a fantasy just two days ago, but it’s now more probable than possible.