Nvidia (NVDA 2.37%) has been at the forefront of the growth related to artificial intelligence (AI), and CEO Jensen Huang is seeing many trends play out. The exciting opportunities in AI are why he remains optimistic about the company’s continued growth.
There’s one area of AI that he’s particularly excited about, which he says is causing overall demand to go parabolic, and that’s agentic AI.
Image source: Getty Images.
Why agentic AI is key to overall demand
Agentic AI is the process by which AI can take on complex, multi-step processes and procedures. It’s no longer about a single question-and-answer type of query users might have with a chatbot, in search of a simple answer. With Agentic AI, users can now ask an AI to research a topic, analyze it, summarize it, and then provide the results in a particular format back to the person who requested it. This is the type of AI that can transform and eliminate common everyday tasks. Huang says that “AI can now do productive and valuable work.”
That really is the key for companies, which can now see a tangible benefit to AI. I’ve seen it work incredibly well: I put in a request for the AI to pull historical quarterly financial results for a stock by directing it to look at a company’s press releases, then summarize the data in a table. For the average office worker, the task could have taken well over an hour, given how tedious it was, and AI did it in a few minutes. These are the game-changing “aha” moments for businesses where they see the real payoff from AI. It’s no longer using it just to find answers to questions, but in deploying AI to complete tasks that a user might normally do.
Today’s Change
(-2.37%) $-5.09
Current Price
$209.77
Key Data Points
Market Cap
$5.2T
Day’s Range
$209.33 – $214.13
52wk Range
$132.92 – $236.54
Volume
2M
Avg Vol
167.1M
Gross Margin
74.15%
Dividend Yield
0.02%
If AI demand is going parabolic, is Nvidia’s stock a no-brainer buy?
A surge in AI demand can mean continually strong growth for Nvidia. But with the company also coming off a quarter where its revenue rose by 85%, the obvious question becomes how much higher can its growth rate go, and what rate would be necessary for the tech stock to truly take off? Shares of Nvidia have been rising and are up more than 60% over the past 12 months, but they fell after the company reported its latest earnings numbers.
Investors also shouldn’t forget that a surge in AI demand may not necessarily mean that all of that will flow through to Nvidia. More tech companies are developing their own chips and looking to alternatives beyond Nvidia’s high-priced products. The business is solid, and it can be a good buy for the long haul, but investors should temper their expectations given its high valuation.
