From Nasdaq:

Artificial intelligence (AI) has had a significant impact on the market trajectory, even igniting a rally in 2023. Generative AI promises to increase productivity, sparking debate on its potential worth of at least $1 trillion. Businesses and investors are eager to get involved, reflecting a belief that AI could be the most profound opportunity of our time.

While some are decrying AI as a bubble or hype, others, including Arm Holdings CEO Rene Haas, assert that AI represents a momentous opportunity. Nvidia is one AI stock that has captured the attention of many, boasting a gold standard position in cloud infrastructure, which includes major players like Amazon Web Services, Microsoft Azure, and Alphabet’s Google Cloud, among others.

Nvidia’s pioneering work with the modern graphics processing unit (GPU) technology places it in a dominant position in the machine learning market, with around 95% of the market. This makes Nvidia the go-to choice for cloud infrastructure providers, pointing to substantial untapped market potential. The company’s ongoing investment in research and development is a key factor in its continued innovation and market dominance.

For example, in its most recent fiscal year, Nvidia devoted a staggering 27% of its total revenue, amounting to $7.34 billion, to research and development — an investment that has paid off, with record revenues of $18.1 billion in a recent quarter. Despite its high valuation by typical metrics, including a price-to-earnings ratio of 92 and price-to-sales ratio of 39, Nvidia’s strong triple-digit growth suggests that it is undervalued, making it a compelling investment opportunity.

The Motley Fool Stock Advisor team has identified 10 best stocks for investors to buy, but Nvidia was not among them. However, the Stock Advisor service has greatly outperformed the S&P 500 since 2002, making it an attractive resource for investors looking to capitalize on future stock picks. The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.



Read more: Arm CEO Rene Haas Calls AI the “Most Profound Opportunity in Our Lifetimes.” 1 Stock I’ll Be Buying Hand Over Fist if He’s Right.