It's difficult to overstate the impact billion casino royal:artificial intelligence (AI) will have on the world iౠn the coming years. While AI has been around in one form or another for decades, the latest developments have the potential to move the needle in ways we can't yet imagine.
billion casino royal:Generative AI has demonstrated the ability to create original text, images, and audio, but its potential goes far beyond that. When properly trained, the🃏se systems can summarize and draft emails, create presentations, search for and compile data, and even draft and debug complicated computer code.
Goldman Sachs Research haﷺs crunched the numbers, and its estimate is jaw-dropping. As AI works its way into business systems and society in general, it could be worth as muc𒆙h as $7 trillion over the next 10 years.
While there are bound to be many beneficiaries, one company well-positioned to reap its portion of this AI windfall is Nvidia (NVDA 0.32%).
A prescient pivot
To understand how the company got to where it is today, it's important to take a step back. Nvidia originally made its fortunes by pioneering the billion﷽ casino royal𝓀:graphics processing units (GPUs) that created lifelike images in video games, revolutionizing ✤the industry.
Competing from a place of strength
One of the biggest risks the bears cite is the coming competition, but Nvidia's relentless pace of innovation has kept its rivals at bay. The company has an estimated 95% share of the data center market, according to CFRA Research analyst Angelo Zino, so Nvidia has a strong foothold.Furthermore, data center demand is expected to double by 2030, according to a report by commercial real estate advisory firm Newmark Group. Estimates suggest it took more than 10,000 Nvidia chips to train Chat-GPT in 2022, and newer versions will require even more. This illustrates why demand for Nvidia's gol♉d-stand🦄ard AI processing chips should remain high.
Nvidia is also the undisputed leader in machine learning, an earlier and well-established branch of AI. Nvidia controls roughly 95% of the market, according to data compiled by New Street Research. Data centers are inextricably entwined with AI technology, and Nvidia has a commanding lead in both. While there's always the potential a rival could develop a more powerful or cost-effective AI solution, Nvidia's years of experience suggest it will be difficult to dislodge.You get what you pay for
Another issue raised by Nvidia bears is the company's valuation. The stock is selling for 68 times earnings and 33 times sales (as of this writing), which will likely cause some investors to balk. However, the company's long track record of growth and future expectations should be considered. Nvidia stock is currently selling for 32 times forward earnings, only a slight premium to the multiple of 27 for the S&P 500 (^GSPC 0.16%).
Despite its recent pullback, Nvidia is still up nearly 200% over the past year and that's no anomaly. The stock has gained 1,600% over the past five years and 16,910% over the past 10 years. While investors shouldn't expect that level of gains over the coming decade, one thing is for sure: Nvidia is well-positioned to reap the ongoing windfall resulting from AI and represents a once-in-a-generation investment opportunity.