Alert:3 New ETFs Launched

<p class="d-inline">Alert:<small class="text-black ps-2">3 New ETFs Launched</small></p>

Is It Too Late to Buy Nvidia

Posted:
Is It Too Late to Buy Nvidia

Since the beginning of 2024, Nvidia's (NVDA) stock has climbed roughly 150%. After such a surge, many investors believe they've missed their chance and that the stock won't rise further. However, this mindset also kept some from buying when the stock was up 50% or 100%.

Similarly, Nvidia's stock has skyrocketed nearly 750% since early 2023 and since 2014, the stock has surged nearly 23,000%. Despite these gains, every day in 2023 presented a great buying opportunity. This hesitation often stems from price anchoring, where investors fixate on past prices they could have paid.

Several factors have driven Nvidia's stock higher over the past decade. Its graphics processing units (GPUs) have long been the top choice for serious gamers, but Nvidia successfully adapted its advanced chips for data centers and cloud computing. GPUs have also excelled in handling artificial intelligence (AI), a field where adoption is rapidly growing, fueling the stock's recent surge.

For investors who have been watching from the sidelines during Nvidia's explosive rise, the question remains: Is there still upside potential, or has the opportunity passed? Let’s explore the evidence.

NVIDIA’s Recent Market Surge

NVIDIA’s stock has experienced a meteoric rise in recent years, particularly in 2023, when it saw significant gains. This surge can be attributed to several key factors that have propelled the company to the forefront of the technology industry. Below are the primary drivers behind

NVIDIA's recent market success:

  1. The AI Revolution

NVIDIA’s GPUs have become the backbone of artificial intelligence (AI) advancements. The company’s hardware is widely used in training deep learning models, enabling breakthroughs in AI research and applications. As AI adoption across industries accelerates—from healthcare to finance—demand for NVIDIA’s GPUs continues to skyrocket. This AI-driven momentum has been a major catalyst for the company’s stock price rally.

Nvidia has successfully tapped into the surging demand for AI chips, resulting in a remarkable 262% increase in its data center revenue. Its latest advancements, like the Blackwell GPU, are purpose-built to manage large-scale AI tasks, solidifying Nvidia's position as a frontrunner in the AI chip sector.

  1. Explosive Growth in Data Centers

As cloud computing and data-driven technologies become more integral to businesses, the need for high-performance computing hardware has surged. NVIDIA’s chips are at the heart of data center operations, providing the processing power needed to handle large-scale AI workloads, big data analytics, and cloud-based applications. In 2023, the company reported massive growth in its data center segment, further fueling investor confidence.

  1. Gaming Market Dominance

Despite NVIDIA's expansion into new markets, gaming remains a cornerstone of its business. The company’s flagship GPUs, such as the GeForce series, dominate the gaming market, delivering cutting-edge performance for gaming enthusiasts and professional esports players. As the gaming industry continues to grow and evolve, NVIDIA is expected to maintain its stronghold in this sector, benefiting from rising demand for high-performance hardware.

  1. Strategic Ventures into Emerging Markets

NVIDIA is positioning itself in future technologies like autonomous driving and the metaverse. The company’s automotive division is making strides in developing AI-powered hardware for self-driving cars, while its Omniverse platform is seen as a critical enabler for metaverse development. These emerging markets represent new growth avenues that could further boost NVIDIA's stock over the coming years.

  1. Financial Performance

NVIDIA’s yearly earnings of 2024 and Q1 2025 have consistently exceeded expectations, demonstrating robust revenue growth and profitability. Its financial results reflect the company’s successful execution of its strategy, and positive earnings surprises have contributed to the stock's upward trajectory.

Nvidia's market dominance has significantly boosted its pricing power, leading to a doubling of its EBITDA margin to around 60% in 2024. While this growth may slow down somewhat, experts predict that Nvidia's pricing power will remain strong for the foreseeable future, driven by ongoing demand in high-performance computing, gaming, and AI applications. The company’s brand reputation and robust software and maintenance ecosystem further solidify its ability to maintain premium pricing.

Key Factors Driving NVIDIA’s Future Growth

As NVIDIA continues to expand its influence across multiple sectors, its long-term growth prospects are underpinned by several key factors. These growth drivers position the company not only as a leader in the present-day tech industry but also as a crucial player in the future of computing, AI, and digital transformation. Below are the key factors expected to drive NVIDIA’s future growth:

  1. AI and Machine Learning: NVIDIA's GPUs are essential for AI tasks, powering industries like healthcare, autonomous vehicles, and fintech. Platforms like DGX and CUDA, along with chips for large language models, will drive growth as AI adoption expands.

  2. Data Centers and Cloud Computing: NVIDIA’s GPUs power cloud providers like AWS and Google Cloud for AI and HPC tasks. Its data center business is a significant revenue contributor, driven by demand for advanced cloud-based hardware.

  3. Gaming Leadership: NVIDIA dominates gaming with its GeForce RTX series, crucial for immersive experiences, esports, VR, and AR. Growth is also boosted by cloud gaming with GeForce Now.

  4. Autonomous Vehicles: NVIDIA’s DRIVE platform is key for automakers like Mercedes-Benz and BMW, enabling advanced driver-assistance and autonomous driving capabilities, positioning the company as a leader in the autonomous vehicle industry.

  5. Metaverse and Omniverse: NVIDIA’s Omniverse platform enables real-time virtual world creation, gaining traction in industries for simulation, digital twins, and collaborative environments.

  6. New Markets: NVIDIA is expanding into areas like healthcare (AI medical imaging) and robotics (industrial automation), opening new growth opportunities.

  7. Market Position: NVIDIA’s dominance in AI and HPC allows it to command premium prices, as seen with its $40,000 H100 GPUs, far outpacing AMD’s competing products. Its strong brand and CUDA software ecosystem support this pricing power.

Potential Risks and Challenges

Despite NVIDIA’s impressive growth and strong market position, it faces several risks and challenges that could impact its future performance:

  1. High Valuation Concerns: NVIDIA's stock trades at a high premium compared to peers, driven by high growth expectations in AI and data centers. If these expectations aren't met, a price correction could occur.

  1. Increasing Competition: NVIDIA faces growing competition from AMD, Intel, and custom AI chip developers like Google and Amazon, which could erode its market share in GPUs and AI hardware.

  1. Supply Chain and Geopolitical Risks: Dependence on a global supply chain makes NVIDIA vulnerable to disruptions. Chip shortages and geopolitical tensions, particularly involving U.S.-China relations, could impact production and sales.

  1. Cyclical Nature of the Semiconductor Industry: The semiconductor industry is cyclical, and any slowdown in demand for gaming GPUs or AI investments, coupled with macroeconomic factors like inflation or recession, could impact NVIDIA's growth.

  2. Dependence on Key Markets: NVIDIA relies heavily on sectors like AI, gaming, and data centers. Market saturation, regulatory changes, or shifts in demand could significantly impact its performance.

  1. Execution Risks: Expanding into new markets such as autonomous vehicles and the metaverse involves execution risks, including technological challenges and regulatory hurdles, which could delay or limit growth.

Growth Potential

Nvidia's extensive growth potential remains strong, despite the recent rise in its stock price. From a forward-looking perspective, its current valuation is reasonable. As AI adoption continues to expand across multiple industries, Nvidia's future revenue and earnings appear highly promising. Projections show significant revenue growth for the company in the coming years, with some analysts predicting it could surpass $200 billion by 2026.

Conclusion

While NVIDIA's stock has experienced tremendous growth, driven by its leadership in AI, data centers, and gaming, the question of whether it's too late to invest is nuanced. The company's strong market position, expanding into future growth areas like autonomous vehicles and the metaverse, and consistent financial performance suggest there could still be upside potential. However, high valuation concerns, increasing competition, supply chain risks, and the cyclical nature of the semiconductor industry are important factors to consider. Potential investors should weigh these growth prospects against the risks and market sentiment, aligning with their investment strategy and risk tolerance to make an informed decision.

Visit Us: https://graniteshares.com/institutional/uk/en-uk/

Capital at Risk | Sophisticated Investors Only 

Sources:

  1. The Motley Fool
  2. yahoo.com

 

NVIDIA ETFs by GraniteShares

Product name Ticker
US

GraniteShares 2x Long NVDA Daily ETF

3LNV

GraniteShares 2x Short NVDA Daily ETF

3SNV

GraniteShares 2x Long TSLA Daily ETF

TSLR

GraniteShares 2x Short TSLA Daily ETF

TSDD

GraniteShares Nasdaq Select Disruptors ETF

DRUP

GraniteShares Bloomberg Commodity Broad Strategy No K-1 ETF

COMB

RISK FACTORS AND IMPORTANT INFORMATION

This material must be preceded or accompanied by a Prospectus. Carefully consider the Fund’s investment objectives risk factors, charges and expenses before investing. Please read the prospectus before investing.

The Fund is not suitable for all investors. The investment program of the funds is speculative, entails substantial risks and include asset classes and investment techniques not employed by most ETFs and mutual funds. Investments in the ETFs are not bank deposits and are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.

The Fund is designed to be utilized only by knowledgeable investors who understand the potential consequences of seeking daily leveraged (2X) investment results, understand the risks associated with the use of leverage and are willing to monitor their portfolios frequently. For periods longer than a single day, the Fund will lose money if the Underlying Stock’s performance is flat, and it is possible that the Fund will lose money even if the Underlying Stock’s performance increases over a period longer than a single day. An investor could lose the full principal value of his/her investment within a single day. The Fund seeks daily leveraged investment results and are intended to be used as short-term trading vehicles. This Fund attempts to provide daily investment results that correspond to the respective long leveraged multiple of the performance of its underlying stock (a Leverage Long Fund).

Investors should note that such Leverage Long Fund pursues daily leveraged investment objectives, which means that the Fund is riskier than alternatives that do not use leverage because the Fund magnifies the performance of its underlying stock. The volatility of the underlying security may affect a Funds' return as much as, or more than, the return of the underlying security.

Because of daily rebalancing and the compounding of each day’s return over time, the return of the Fund for periods longer than a single day will be the result of each day’s returns compounded over the period, which will very likely differ from 200% of the return of the Underlying Stock over the same period. The Fund will lose money if the Underlying Stock’s performance is flat over time, and as a result of daily rebalancing, the Underlying Stock volatility and the effects of compounding, it is even possible that the Fund will lose money over time while the Underlying Stock's performance increases over a period longer than a single day.

Shares are bought and sold at market price (not NAV) and are not individually redeemed from the ETF. There can be no guarantee that an active trading market for ETF shares will develop or be maintained, or that their listing will continue or remain unchanged. Buying or selling ETF shares on an exchange may require the payment of brokerage commissions and frequent trading may incur brokerage costs that detract significantly from investment returns.

An investment in the Fund involves risk, including the possible loss of principal. The Fund is non-diversified and includes risks associated with the Fund concentrating its investments in a particular industry, sector, or geographic region which can result in increased volatility. The use of derivatives such as futures contracts and swaps are subject to market risks that may cause their price to fluctuate over time. Risks of the Fund include Effects of Compounding and Market Volatility Risk, Leverage Risk, Market Risk, Counterparty Risk, Rebalancing Risk, Intra-Day Investment Risk, Other Investment Companies (including ETFs) Risk, and risks specific to the securities of the Underlying Stock and the sector in which it operates. These and other risks can be found in the prospectus.

This information is not an offer to sell or a solicitation of an offer to buy shares of any Funds to any person in any jurisdiction in which an offer, solicitation, purchase or sale would be unlawful under the securities laws of such jurisdiction. Please consult your tax advisor about the tax consequences of an investment in Fund shares, including the possible application of foreign, state, and local tax laws. You could lose money by investing in the ETFs. There can be no assurance that the investment objective of the Funds will be achieved. None of the Funds should be relied upon as a complete investment program.

The Fund is distributed by ALPS Distributors, Inc, which is not affiliated with GraniteShares or any of its affiliates ©2024 GraniteShares Inc. All rights reserved. GraniteShares, GraniteShares Trusts, and the GraniteShares logo are registered and unregistered trademarks of GraniteShares Inc., in the United States and elsewhere. All other marks are the property of their respective owners

f