Nvidia enters $1 trillion club: Missed opportunity or time to buy for Indian investors?
4 min read 31 May 2023, 05:59 AM ISTNvidia Corp has become the latest US firm to achieve a $1trillion market-capitalisation. Its stock value has tripled in under eight months, boosted by the rapid development of generative AI. The other US firms with trillion-dollar valuations are Alphabet, Amazon, Apple, and Microsoft.
PremiumNvidia Corp joined an exclusive club of US firms with a market-capitalisation of $1 trillion on May 30, as investors flocked the chipmaker's stock that has fast become one of the biggest winners of the Artificial intelligence (AI) boom.
The Nvidia share price has tripled in less than eight months, indicating the spike in interest in artificial intelligence following rapid developments in generative AI, which can participate in human-like dialogue and craft everything from jokes to poetry.
Nvidia has gained about 240% since October, considerably surpassing the S&P 500 index as a whole. The increase has pushed its valuation above that of its peers, but some experts believe the AI boom implies the company should still be worth more.
The Nvidia stock soared as much as 7.7% early in the morning US time, bringing Nvidia far above the $1 trillion mark, before reducing its gains. Alphabet Inc., Amazon.com Inc., Apple Inc., and Microsoft Corp. are the only other US corporations with trillion-dollar valuations, and fewer than ten companies worldwide have achieved the feat. On Tuesday, the stock closed at $401.11, up nearly 3% on Nasdaq.
Nvidia Corporation is a multinational technology company based in California that creates graphics processing units (GPUs), application programming interfaces (APIs) for data science and high-performance computing, and system on a chip units (SoCs) for the mobile computing and automotive markets.
FAANG is an acronym that stands for Facebook, Amazon, Apple, Netflix, and Google. These stocks are the tech darlings of Wall Street and Indian investors have also been investing in these due to their popularity. The street expects Nvidia Corp to join the group as well. Since the Nvidia stock has come into the limelight after gaining many-folds, the question now is - should Indian investors invest in the stock? Here's what the experts have to say.
Ashish Ranawade, Head of Products, Emkay Wealth
"From an Indian investor point of view where is he/she going to find companies which are doing cutting edge AI/ML work in India? Or even companies which are doing cutting edge research in Advance Materials, Space technologies, nano technology, biotech etc. USA and the Nasdaq is the place to find many such companies. The US market was down quite a lot in November and then again took a dip in March this year. We have been recommending our investors to start looking at US stocks and ETFs since then. Our favourite was the Mirae Asset FANG+ ETF. Nvidia is among the ten stocks, which are allocated an equal weight of 10% within the fund and the fund has seen a very strong performance in the last 2 months.
Nvidia may or may not perform as well as it has done in the last one month, but there are plenty of such stocks in the US, especially listed on the Nasdaq, which may be worth a look," said Ashish Ranawade.
Also read: US stocks in focus
Vinit Bolinjkar, Head of Research, Ventura Securities
According to Bolinjkar, Nvidia stock should be owned by Indian investors as the stock has been doing well in the US markets.
Nvidia, a leading manufacturer of supercomputers and data centre chips for AI tasks, is poised for success in the burgeoning AI industry. The company's recent series of launches has propelled its stock performance, making it an attractive addition to Indian investors' portfolios.
Notable announcements include the introduction of the DGX GH200 AI supercomputer platform, which is set to enable tech companies to develop advanced successors to ChatGPT. Key players such as Microsoft Corp, Meta Platforms Inc, and Alphabet Inc are among the first expected users of this groundbreaking product.
Furthermore, Nvidia has forged a partnership with WPP Plc to leverage AI and the metaverse to reduce the cost of advertising production. In addition, the company's introduction of Nvidia ACE for games, utilising AI to enhance the graphics of background characters, showcases its transition from a graphics chip manufacturer to a pivotal player in the AI revolution.
"Nvidia's consistent surpassing of analyst estimates by a significant margin can be attributed to the surging demand for data centre chips. As technology giants like Microsoft Corp, Meta Platforms Inc, and Alphabet Inc strive to develop services similar to OpenAI Inc.'s ChatGPT chatbot, the demand for substantial computing power intensifies. Nvidia stands out by not only offering cutting-edge equipment for data centres but also constructing its supercomputers.
Considering the introductory stage of the AI world and the substantial progress yet to be made, we anticipate this trend to persist in the long term. Therefore, Indian investors would be wise to include Nvidia in their portfolios, capitalising on the company's position at the forefront of the AI boom," said Bolinjkar.
Avinash Gorakshakar, Head-Research at Profitmart Securities
Also Read: Nvidia shorts down $4.1 bn in mark-to-market losses since May 24: S3 Partners
According to Gorakshakar, the video game computer chip maker Nvidia has become an unlikely kingmaker thanks to the AI boom, nearing a trillion-dollar valuation.
“Looking at the strong growth expected in the AI market and the strong business vertical of Nvidia Indian investors can surely add this stock in there PFS for long term as the secular growth story has just started and will play off strongly over the next 2 to 3 years ahead," said Avinash.
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