When it comes to artificial intelligence (AI) companies, amidst the “Magnificent Seven,” Nvidia stands out as a behemoth, rivaling the towering market caps of its peers in the landscape, save for Tesla. Valued above $1 trillion, Nvidia (NASDAQ: NVDA) dominates the tech realm with its niche expertise in crafting semiconductor chips known as graphics processing units (GPU).

The past year witnessed an astronomical surge in GPU demand fueled by a myriad of generative AI applications encompassing machine learning and accelerated computing. This surge catapulted Nvidia’s shares, which ascended by a jaw-dropping 284% in a span of twelve months.

As of March 7 closing bell, Nvidia experienced a mind-boggling ascension, adding a staggering $1 trillion to its market capitalization since mid-January. The best part? This thrill ride is far from over.

Unpacking Nvidia’s venture into the prestigious $2 trillion club and the potential for continued ascendancy paints a picture of triumph amidst fierce competition.

The Impressive Path to $1 Trillion for Nvidia

Nvidia’s revenue streams stem from diverse sources, spanning graphics processors, compute networking, and data center operations. Notably, in its fiscal year 2024 concluded on Jan. 28, Nvidia’s data center business emerged as the primary revenue driver, soaring by an impressive 217% year-on-year.

While this feat is undeniably remarkable, what might elude many investors is the steady ascent of Nvidia’s data center business over an extended period. The broader compute and networking division’s revenue, inclusive of data centers, escalated by a staggering more-than-1000% in just four years.

This pivotal data underscores Nvidia’s longstanding supremacy in the AI domain, fortified by wielding a potent first-mover advantage in AI-centric chips and quantum computing, granting Nvidia substantial pricing dominion over its competitors.

Evidently, Nvidia’s surging revenue spurred significant margin expansion, translating to burgeoning bottom-line figures. In the fiscal year concluding on Jan. 28, Nvidia magnified its free cash flow over sixfold compared to the prior year, amassing a whopping $27 billion.

Now armed with a robust war chest and witnessing a crescendoing interest in AI, Nvidia is strategically poised to continue its dominion. Delving into the realms beyond GPUs and data centers unveils exciting horizons the company is exploring.

Image source: Getty Images

Unveiling Nvidia’s Future Trajectory

With ample coffers at its disposal, Nvidia subtly channeled capital into diverse arenas, poised to unlock sustained growth vectors.

Back in September, Nvidia leaped into a $500 million funding round for the AI startup Databricks. Initially raising eyebrows, this investment was further elucidated during the fourth-quarter earnings call, spotlighting Nvidia’s latest billion-dollar venture into enterprise software.

While bolstering its core chip business, Nvidia covertly constructed a software platform poised to complement its semiconductor operations. Software services harbor multitudinous AI applications, with Nvidia’s foray into the domain extending beyond conventional boundaries.

Moreover, Nvidia ventures into voice-recognition software present a unique dimension, underscoring a departure from the conventional tech trajectory. While giants like Apple, Amazon, and Alphabet have long invested in the voice-tech domain, Nvidia’s strategic interest in SoundHound AI illustrates a disruptive pivot.

Embracing the realm of humanoid robotics, an area predominantly synonymous with Tesla’s Optimus bot, Nvidia joined forces with Intel Capital, OpenAI, and Jeff Bezos in a funding drive for Figure AI. The robotics saga unfolds as Nvidia plants its footprint in both hardware and software applications.

Paving the Way Forward for Nvidia

Echoing a sentiment of optimism as a long-term investor, Nvidia’s aggressive strides beyond GPUs and data centers evoke promise for the future. Although the software arena remains nascent and nascent phases encapsulate these investments’ potential, Nvidia’s AI roadmap teems with allure.

Trading at a price-to-earnings (P/E) ratio of 74, Nvidia’s stock exudes opulence. However, the stratospheric trajectory of the company’s revenue and profits foretell a future devoid of stagnation.

While Nvidia took over two decades to cultivate a $1 trillion market cap, the journey to $2 trillion materialized in less than a year.

Albeit the future path of Nvidia remains shrouded in uncertainty, a layer of confidence envelopes the notion of forthcoming gains in the long haul. With diversified forays into novel markets, Nvidia rapidly distinguishes its business from the competition.

Looking ahead, I envisage Nvidia metamorphosing into a comprehensive AI platform interwoven by a distinctive blend of hardware and software. Despite shouldering a premium valuation, the present juncture presents an opportune moment to secure some Nvidia shares.

Should you invest $1,000 in Nvidia right

Considering the Stock Advisor Perspective on Nvidia

Before diving headfirst into purchasing Nvidia shares, it’s crucial to weigh all available information. The Motley Fool Stock Advisor team recently unveiled their selection of the best stocks for investors to consider, and surprisingly, Nvidia did not make the prestigious list. The 10 stocks deemed worthy by these analysts are projected to yield significant returns in the foreseeable future.

Stock Advisor acts as a navigator in the unpredictable waters of stock investing. With a clear roadmap for success, including portfolio construction advice, regular analyst updates, and bi-monthly stock recommendations, this service has outshone the S&P 500 by a staggering margin since 2002.

An Eye on Nvidia in the Current Market Landscape

i See the 10 stocks highlighted by the Stock Advisor team that promise exceptional growth opportunities in the ever-evolving market.

*Stock Advisor returns as of March 11, 2024

Key Insights from Industry Experts

It’s worth noting that the absence of Nvidia on the esteemed list propounded by Stock Advisor may give potential investors pause. With John Mackey, the former CEO of Whole Foods Market, an Amazon subsidiary, and Suzanne Frey, an executive at Alphabet, both being members of The Motley Fool’s board of directors, it adds an extra facet to the analysis.

Investor Adam Spatacco’s diverse array of positions in Alphabet, Amazon, Apple, Microsoft, Nvidia, and Tesla, along with The Motley Fool’s recommendations for Intel, shed light on the multifaceted relationships within the tech and investment spheres.

While The Motley Fool takes a cautious stance on Nvidia, its endorsement of other tech giants like Alphabet, Amazon, Apple, and Microsoft underlines the complex dynamics of the market. The inclusion of various positions and options further emphasizes the intricate strategies at play in the investment landscape.

As investors navigate the turbulent waters of the stock market, insights from seasoned analysts provide valuable guidance to help chart a steady course towards potential gains.