Nvidia stock up 5% after AI Summit, potential for growth but uncertainty surrounding profitability

From Nasdaq: 2024-10-12 08:00:00

Nvidia launched its AI Summit in D.C., showcasing real-world AI applications. Despite 2,700% stock growth in 5 years, market awaits concrete data. OpenAI’s ChatGPT has sparked grand projections for the $1.3 trillion generative AI market by 2033. Nvidia focuses on software development to drive value and unveils plans for physical AI projects like AI-capable robots. Foxconn partners with Nvidia for robot development, but investment caution advised due to uncertain profitability of AI projects.

Following the AI Summit, Nvidia stock sees 5% increase. Second-quarter revenue reaches $30 billion, mainly driven by demand for data center GPUs like h100 and h200. Although Nvidia’s valuation is relatively cheap, the market questions its ability to maintain momentum with AI business growth. Rand Corporation research shows a 80% failure rate for AI projects, raising doubts about sustainability.

Big tech firms like Meta Platforms invest in Nvidia’s hardware amid AI race. Meta plans to boost infrastructure spending to train AI models like Llama, expecting to keep up with rival platforms. Nvidia’s business outlook remains strong, despite profit uncertainties in the AI market. Investors are wise to await more information before investing in Nvidia stock.

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Disclaimer: Randi Zuckerberg and Suzanne Frey are on The Motley Fool’s board. Author Will Ebiefung has no positions mentioned. The Motley Fool recommends and has positions in Alphabet, Meta Platforms, and Nvidia. As of October 7, 2024, Stock Advisor returns reflect substantial growth from previous recommendations.



Read more at Nasdaq: Up 2,700% in 5 Years, Is Nvidia Stock Still a Buy?