Nvidia management sees data center spending rapidly increasing over the next five years.
To take advantage, Nvidia is forming several powerful partnerships.
The stock isn’t as expensive as it looks when you factor in its long-term growth rates.
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Nvidia (NASDAQ: NVDA) is the world’s largest company, which creates the impression that there isn’t much more growth it can gain. And yet, there are several compelling reasons why it’s still a great investment now. The artificial intelligence (AI) buildout is far from over, and Nvidia’s leadership position will be nearly impossible to topple.
There are countless reasons why Nvidia is an excellent investment. Here are three specific reasons it’s a great buy now for the long term.
With companies already spending billions of dollars annually on AI data centers, it would seem that there isn’t much more that can be spent. And yet the AI hyperscalers are seeing so much demand that they keep committing more cash flow to AI buildout. Nvidia sees total data center capital expenditures reaching $600 billion this year, but by 2030, it expects global data center buildouts to reach $3 trillion to $4 trillion.
That’s a massive increase, but is that realistic?
Currently, there are only two countries that are heavily investing in AI technology, the U.S. and China. As of now, Nvidia still hasn’t acquired its export licenses to resume selling to China, so this massive market is still unavailable to Nvidia. Furthermore, Europe is just now starting to wake up to the AI trend, and that could represent another giant economy that could massively increase the demand for Nvidia’s graphics processing units (GPUs).
Additionally, data centers take years to build. The announcements that are coming out this year about data centers being built by the AI hyperscalers will take a few years to become operational, so it’s a good bet that these companies are in constant communication with Nvidia to ensure that the computing units will be available when the time comes to install them.
This all bodes well for Nvidia, and it’s becoming clearer that the AI computing power buildout trend is far from over.
Nvidia has also been busy forming partnerships to ensure it stays at the top of the computing world.
Nvidia recently announced that it signed a deal to deploy 10 gigawatts of AI computing power to OpenAI, the makers of ChatGPT. OpenAI is paying for this through Nvidia’s $100 billion investment, making Nvidia a partner with OpenAI. By teaming up with one of the leaders in generative AI technology, Nvidia is securing its spot as the computing provider of choice to one of the most important AI companies.