Nvidia is known for its graphics cards, but the company also produces microchips for autonomous driving cars and AI applications. The company’s CEO, Ginseng Huang, is positioning Nvidia to be at the forefront of bringing AI to every industry.
NVDA is the best-performing AI stock over the past year. Earnings per share, or EPS, had a big leap higher in 2023, and analysts project strong EPS growth going forward. It has the highest forecasted 5-year EPS growth on the list.
The company has an “A” financial health rating from Morningstar, and it is expected to grow EPS by 21.9% next year.
The current price-earnings, or P/E, ratio is high at 75.9. However, if earnings growth continues as expected, the high valuation is fair. The increasing EPS figures are being factored in by investors.
As an added bonus, NVDA buys back shares. That helps bolster stock performance over the long run. It has a buyback yield of 0.7%. It is also one of the best-performing stocks over the last decade, with an average yearly return of 68.8%.
In a small number of cases, these companies are even poised to become leaders in the emerging AI landscape. Two AI stocks Warren Buffett owns that provide Berkshire Hathaway long-term exposure to artificial intelligence are Amazon and Snowflake.
The potential applications of AI are vast and varied. By 2025, we can expect AI to be deeply integrated into many aspects of our lives. Some anticipated applications include: Smart cities: AI will optimise traffic flow, manage energy consumption and improve public safety.
The most recent statistics predict it will be worth US$ 184.00bn in 2024. However, that is a small fry compared to forecasts for 2030. The market is expected to grow at almost 29% and will be worth a staggering US$826 billion by the end of the decade.
Just about everyone in the investing world, it seems, is bullish on artificial intelligence over the long term. Tech firms, utilities and other companies plan to spend more than $1 trillion on AI infrastructure over the next several years, according to Goldman Sachs analysts.
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