David Nicholas, President and founder of Nicholas Wealth Management, is advocating for investors to pay close attention to Nvidia shares following Argentina’s recent election. The company’s continued success in the artificial intelligence (AI) market has resulted in significant revenue and net income increases, despite concerns about trade restrictions.
In the third quarter of Nvidia’s 2024 fiscal year, the AI giant saw its revenue rise by 206% year-over-year and 34% from the prior quarter to over $18 billion. Additionally, its net income rose 49% from the prior quarter and a staggering 1,259% year-over-year to $9.2 billion. Founder and CEO Jensen Huang attributed this success to the increasing demand for accelerated computing and generative AI.
However, potential challenges lie ahead for Nvidia, particularly in the form of export controls implemented by the U.S. government. These controls require the company to obtain licenses to sell certain advanced chips to countries such as China, Vietnam, and some in the Middle East. As a result, Nvidia’s sales to these destinations are expected to decline significantly in the fourth quarter of fiscal 2024.
To navigate these challenges, Nvidia is planning to introduce new products that comply with export control regulations, allowing them to sell AI chips to these countries. Despite these obstacles, Nvidia’s stock has seen a significant increase in 2023, with a rise of over 248%.
The potential emergence of a new AI chip competitor, such as OpenAI’s early-stage project Tigris, also poses a threat to Nvidia’s market dominance. With other tech companies considering making their own chips, the AI landscape may see significant changes in the near future.
As Nvidia and other industry players navigate these developments, investors are advised to closely monitor news related to the company and the broader AI market. With the sector poised for growth despite challenges, staying informed is crucial for making informed investment decisions.