The AI era is driving Nvidia to new heights: Is it too late to invest?

The advance of artificial intelligence in 2023 has triggered remarkable success for the semiconductor manufacturer Nvidia. As a pioneer in the field of graphics processors, Nvidia has revolutionized the market and made its GPUs an indispensable component in areas such as video games, data centers, and groundbreaking AI applications. The enthusiasm around generative AI promised great things for Nvidia and led its stock to rise by over 800% since the beginning of the year, nearing a historic high. However, the journey was not without turbulence. The stock temporarily lost up to 27% in July but almost fully recovered the following month. The decline was driven by concerns over decreasing AI demand and already priced-in growth, which turned out to be temporary as demand appears to remain robust. Nvidia's dominance remains unbroken, with an estimated market share of 98% in AI-centric processors in 2023. The immense demand led to triple-digit revenue and profit growth over five quarters. Looking ahead to the upcoming fiscal year 2025, ending in October, the company forecasts growth of 79%—still impressive, even if less than during boom phases. Super Micro Computer also confirms the ongoing demand by recently presenting impressive delivery figures for liquid cooling systems and GPUs. Further insights were provided by Nvidia CEO Jensen Huang, who described the demand for the next AI platform 'Blackwell' as "crazy" and spoke of a "first wave of AI" that is just beginning to unfold. Additionally, Nvidia has expanded its partnership with Accenture to help companies quickly adapt to AI. Taiwan Semiconductor Manufacturing (TSMC), one of Nvidia's largest customers, also reported rising revenues, indicating continued strong demand. Although Nvidia may seem expensive due to its price-to-earnings ratio of 62, analysts expect a significantly lower ratio for the upcoming fiscal year, only marginally above the average of the S&P 500. With the prospect of further growth, Nvidia's stock remains promising.