NVDA Stock Forecast: Why the Next Decade Belongs to NVIDIA Corp

NVIDIA Stock
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NVIDIA Stock Price 

One of the wildest runs of 2016 was the surging prices of chip companies, with a particular focus on one major player, NVIDIA Corporation (NASDAQ:NVDA). The NVIDIA stock price absolutely skyrocketed in 2016, gaining well over 200% during the year. And that rocket has not slowed in the least so far in 2017, with the company’s value now hitting all-time highs and registering nearly 55% growth since the beginning of the year. The stock is on fire, and has been one of the best buys over the past 18 months.

nvidia price chart

Chart courtesy of StockCharts.com

So, what’s fueling this flight? Well, in a word, the future.

You see, a great many industries that are projected to be major parts of the future economy rely on the types of chips that NVIDIA produces in order to power these next-generation gizmos. With everything being turned into a computer, it only makes sense that the people who build the chips that power said computers are going to be in high demand.

With that in mind, let’s take a look at some of the hottest industries of tomorrow and how NVIDIA is primed to take advantage of their rise by helping supply the chips that run those machines.

Autonomous Vehicles 

With a growing number of companies looking to get into the autonomous vehicle market, the chips that are being used to power those self-driving cars and trucks need to function at a high level, be reliable, and be safe. After all, we are talking about computers being in control of literally tons of metal speeding down motorways upwards of 80 miles per hour.

Which is to say that making the chips for autonomous vehicles is a very important task and one that NVIDIA has been positioning itself to take a prominent role in for a while now—a move that the company believes will pay off with a rise in the NVIDIA stock price when these robotic drivers do end up hitting the road.

First, consider just how many companies out there that are either rumored or confirmed to be working on self-driving vehicles.

You have Alphabet Inc (NASDAQ: GOOG) creating the “Google Waymo” project. Apple Inc. (NASDAQ:AAPL) has been tied to multiple self-driving car projects, with the latest news being that the company is working on the software for the cars. Of course, Tesla Inc (NASDAQ:TSLA) is well known for its interest in the future of autonomous vehicles, and has already begun using some NVIDIA chips.

And those are only some of the bigger names that are out there. Rather than serving as NVIDIA competition, the more autonomous vehicles on the road the better. While some of these companies may not use NVIDIA chips at the moment, they will all need high-powered chips to power these vehicles, and NVIDIA is one of the most trusted names on the market. They won’t necessarily use NVIDIA chips, but the possibility is there, and is definitely tantalizing to anyone eyeing the NVIDIA stock price.

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Besides the possibilities of future projects, NVIDIA has a lot going for it already when it comes to autonomous vehicles.

Audi AG (ETR:NSU) uses NVIDIA chips in its new flagship 2018 “Audi A8,” powering all sorts of gizmos and gadgets on top of the autonomous vehicle function. The amount of technology loaded into the car is quite daunting, with all manner of technological aides that are designed to make this car one of the standouts in the autonomous vehicles race. (Source: “Audi’s New A8 Turns Mobility Into Magic, Using NVIDIA Tech to Transform Transportation,” NVIDIA Corporation, July 11, 2017.)

The recently revealed supercar is but a taste of the technological innovations we can expect to see in the near future. The powerful marriage between emerging industries and the reliance of these industries on chips are set to make NVIDIA one of the companies best suited for huge gains over the next few years.

In fact, part of what is fueling the company’s rise is its prominent position as a world leader in chip production, coupled with many investors seeing that the future will be filled with chips.

Another reason for the company’s continued success on the stock market is that other auto manufacturers have begun looking at NVIDIA to help them power their cars. Volvo AB (STO:VOLV-B) and NVIDIA recently announced a deal to work together on a line of autonomous vehicles. Mercedes-Benz (part of  Daimler AG) and Toyota Motor Corp (ADR) (NYSE:TM) have also been linked to NVIDIA chips.

The revenue from car chip manufacturing is currently a small portion of NVIDIA’s earnings, making up about just seven percent of its total revenue and bringing in $140.0 million in the first quarter of fiscal 2018, but that could all change. (Source: “NVIDIA Announces Financial Results for First Quarter Fiscal 2018,” NVIDIA Corporation, May 9, 2017.)

While many of the cars that the company is producing chips for aren’t even for sale yet (or street-legal in areas that lack legislation regarding autonomous vehicles) The Boston Consulting Group Inc projects an annual value of $77.0 billion by 2035 for driverless cars. (Source: “Nvidia is distancing itself from its driverless car tech competition,Business Insider, July 17, 2017.)

And all this doesn’t even scratch the surface of the NVIDIA autonomous vehicle play, with other projects, including a partnership with Chinese search-engine giant Baidu Inc (ADR) (NASDAQ:BIDU) on the open-source “Baidu Apollo” project, which is another major move for the company that could pay off with huge gains.

Artificial Intelligence 

Another red-hot market that NVIDIA has situated itself to take advantage of is the artificial intelligence industry.

The tech of the future won’t only be able to drive itself but also think for itself, and NVIDIA is hoping to be there to help power these machines. The revolutionary capacity inherent within the artificial intelligence market makes this one of the boldest and potentially best investments in a generation. What I mean by that is that artificial intelligence carries within it the ability to alter our entire world in both subtle and dramatic ways.

A computer capable of learning on its own could radically reform our society, culture, and economy. The possibilities are endless.

And they needn’t be so world-changing to be profitable either, as deep learning and other artificial intelligence-adjacent industries are already surging and likely to continue prospering for the foreseeable future, so long as data continues to play a central role in all our lives.

NVIDIA’s “Volta,” the most advanced data-center graphics processing unit ever built, is already wowing companies the world over and again maintains NVIDIA’s penchant for pushing the technological envelop to the limits. The datacenter business itself grew from $296.0 million to $409.0 million from the first quarter of 2017 to 2018. In fact, it registered as the segment of NVIDIA with the most gains from 2017 to 2018.

The technology in Volta is exciting precisely because it pushes the envelop and paves the way for NVIDIA to play a leading role in the development of the artificial intelligence industry.

To put it bluntly, how often do you get the chance to invest in a humanity-altering technology? It’s exactly that type of buzz that leads investors to salivate over NVDA stock.

NVIDIA plans to play a key role in the transition of artificial intelligence from science fiction to reality, and many tech pundits are on board and believe that the future is AI. Of course, others believe that the coming artificial intelligence will mark the end of humanity (in which case, your investment portfolio won’t matter much), but barring a robotic revolt that culminates in the extinction of humanity, NVIDIA’s emphasis on AI technology is likely to pay off big down the road.

The Future Is Chips

Technology is not taking a backseat in the future. Machines will be in the driver’s seat, both literally and figuratively, and these machines will need companies like NVIDIA to step up  to supply them with a steady stream of quality chips.

This type of future is one where the NVIDIA stock price continues to fly as the company finds itself making more and more chips for more and more companies in a variety of fields.

Frankly speaking, the depth and breadth of how important chips will be can’t be overstated, nor covered in a single article. The far-reaching implications extend too far into too many different industries.

For instance, consider the surge we’ve witnessed in the cryptocurrency market. A thousand dollars’ worth of Bitcoin in 2010 is now worth over $35.0 million. These dramatic shifts are happening in real time, and it’s all powered by chipmakers like NVIDIA.

Crypto mining and other demanding computational exercises will be undertaken with increasing regularity in the future. They too will be in need of strong chips to power their systems.

The applications and differing industries that will need to use strong computational abilities are only growing in number. The world already runs on data and computers, and that trend shows no sign of slowing down. Being able to get in before the revolution, so to speak, is why NVIDIA has enjoyed such success over the past 18 months, and one of the reasons that NVIDIA is the focus of so many investors.