Semiconductor maker Nvidia Corp. (NASDAQ: NVDA), which is clearly the poster child for artificial intelligence stocks, is up more than 2,200% in the past five years.
Nvidia Corporation's leadership in AI and groundbreaking innovations, coupled with strong R&D spending, underscore its expanding strategic moat against AMD and Intel. The company's stellar financial performance, with a 66% EBITDA margin and $57 billion TTM free cash flow, highlights its massive innovation spending capacity. Nvidia's valuation is compelling with a 30% potential upside, supported by a conservative 6% perpetual growth rate, making it a golden buying opportunity.
The chip maker's investors are digesting a raft of mixed news over the past few days.
President Trump's commitment to AI strengthens Nvidia's position, with bipartisan support for AI protectionism policies and significant investments like Project Stargate. Project Stargate's potential $500b investment in US data centers, led by OpenAI, Softbank, MGX, and Oracle, boosts Nvidia's market demand. Nvidia's dominance is secured by its superior CUDA ecosystem and strategic partnerships, despite competition from AMD, Intel, and custom silicon efforts.
Investors piled into artificial intelligence (AI) stocks last year on optimism that this hot technology would transform every industry -- and this powered gains in the three major benchmarks. The S&P 500, the Nasdaq, and the Dow Jones Industrial Average advanced in the double digits, led by companies developing and using AI.
Nvidia (NVDA) concluded the recent trading session at $147.22, signifying a +0.1% move from its prior day's close.
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Today's Big 3 turns to the A.I. trade by examining big names in the technology and those that will power them.
Alexandr Wang, whose company Scale AI provides training data to key artificial intelligence players including OpenAI, Google and Meta, said Thursday that the AI race between the U.S. and China is an "AI war." Wang said DeepSeek, the leading Chinese AI lab, released an "earth-shattering model" on Christmas Day.
The US is introducing a new initiative to build an AI infrastructure in the country and is projected to spend up to $500 billion in doing so. At this point, the semis are roaring as a result.
There are no guarantees in investing. That's the hard truth we all have to learn.
Trump's AI announcements signal that new technologies will be a priority under his administration.