Contemplating Purchasing Nvidia Before January 6, 2025?
NVidia (NVDA shedding -2.33%) has given investors an year filled with records, achievements, and victories. The leading AI chip designer has reported its highest earnings quarter after quarter and was granted entry into the prestigious Dow Jones Industrial Average. Moreover, NVidia claims the demand for its new Blackwell architecture is skyrocketing. On top of that, the tech titan's stock has surged approximately 160% this year, making it the top performer in the Dow.
As the AI sector continues to prosper, NVidia appears to be the ideal stock to invest in to capitalize on its benefits. The company dominates around 80% of the AI chip market and has built a comprehensive collection of associated products and services. Today's $200 billion AI market is projected to surpass $1 trillion by the end of the decade, with NVidia poised to reap rewards.
So when should you purchase NVidia stock? It's true that the stock could react to any remarks from the company regarding its advancements, the overall demand for its products, or the progress of the Blackwell launch. And this brings to mind a specific event that's set to happen on Jan. 6, 2025. Should you buy NVidia shares before that date?
NVidia's GPUs
Allow me to briefly summarize NVidia's journey till now. This tech giant's primary strength lies in its graphic processing units (GPUs), which originally drove video games but due to their ability to handle multiple tasks simultaneously, they found their niche in other areas, particularly AI. Given their speed, they quickly became favored by AI users.
This has resulted in triple-digit growth in revenue for most recent quarters, with revenues exceeding $35 billion in the latest period and a gross margin of over 70%. This signifies that NVidia is highly profitable on sales. NVidia's return on invested capital (ROIC) over the past few years highlights the company's prudent investments.
Now let's discuss the event on Jan. 6, which is CES 2025, a.k.a. the Consumer Electronics Show in Las Vegas where NVidia Chief Executive Officer Jensen Huang will deliver the keynote speech. From Jan. 7 through Jan. 10, NVidia will engage with journalists and analysts and will be present on the show floor, allowing attendees to witness the company's impact on today's and future products.
In the past, NVidia has showcased its technology early at CES, such as the Nvidia Shield streaming media device and the Nvidia Drive platform for autonomous vehicles. Although NVidia hasn't hinted at what it may present this time, a report from Wccftech, quoting NVidia partner Inno3D, suggests that NVidia may unveil AI innovations like "neural rendering" in the consumer-gaming GPU market.
NVidia's dominance in the gaming market
Although NVidia's data center business now attracts most of its revenue, it's crucial to remember that its video games business saw revenue grow by 15% in the latest quarter to $3.3 billion. Thus, the gaming market still represents a vital growth sector for the company.
It's possible that analysts or journalists may question Huang about the Blackwell launch during CES. While I wouldn't anticipate any major news since NVidia shared a comprehensive update during its earnings report on Nov. 20, even a brief commentary on demand or product release could impact the stock's performance. Blackwell is a customizable platform, featuring more than seven distinct chips, various networking options, and more – and the demand so far has been "crazy," according to comments Huang recently made during a CNBC interview.
Now, returning to the question: Should you buy NVidia before Jan. 6? It's plausible that the stock may increase during or after CES due to optimism about the company's innovations, so if you've been thinking about purchasing NVidia, you might want to join the stock before the event.
However, if you're a long-term investor, short-term price movements won't impact your returns over, say, five or ten years. As a result, you don't have to hurry to get in on NVidia before CES. If you purchase the stock before or after the show, you're still likely to benefit in the long run, thanks to NVidia's market leadership and innovation and the AI market's robust growth potential.
Given the anticipated innovations and potential announcements at CES 2025, investing in NVidia before the event could capitalize on any positive market reactions. However, as a long-term investor, the precise timeline for purchasing NVidia shares might not significantly impact your returns over a decade, given the company's dominant position in AI and the growing market potential.
The success of NVidia has been underpinned by its strong financial performance, including triple-digit revenue growth and a high ROIC, which highlight its smart investment strategies. With its substantial presence in the AI chip market and the projected growth of the AI sector, NVidia is an attractive option for investors seeking opportunities in finance and investing.
