Nvidia Stock Soars as AI Dominance Grows; DGX H100 Systems Begin Shipping

Nvidia's AI Growth Opportunity

Nvidia (NVDA), a dominant player in the data center and gaming sectors, has seen its stock nearly double in 2023. With AI chips presenting a significant growth opportunity, investors are keen to determine if the stock is a good buy. On May 1, Evercore analysts labeled Nvidia a "top pick" in a note to clients, while Rosenblatt Securities listed NVDA among seven chip stocks likely to benefit from increased tech spending on artificial intelligence (AI).

Expanding Reach in AI

In March, Nvidia announced various initiatives to expand its reach in AI, including new products and partnerships. In February, the company delivered a beat-and-raise report driven by its data center segment, which includes AI chips. Advanced chips for "generative AI," like the ChatGPT chatbot, are crucial in the tech industry's fierce battle for AI dominance.

Stock Performance and Breakout

On May 1, Nvidia's stock rose 4.2% amid Wall Street's bullishness about AI growth opportunities, with shares topping a 281.20 buy point from a three-weeks-tight pattern. The stock closed the trading session within the buy range, extending to 295.26. IBD named Nvidia its Stock of the Day on May 1 as the chipmaker broke out.

Earnings and Ratings

Nvidia's EPS Rating is 63 out of 99 and its SMR Rating is a B, gauging sales growth, profit margins, and return on equity. On February 22, the Santa Clara, California-based company beat Wall Street's earnings target for its fiscal fourth quarter and provided higher guidance for the current period. Nvidia's data center revenue increased 11% to $3.62 billion, driven by demand for AI chips.

Market Expansion and DGX H100 Systems

Nvidia's expansion into AI chips for supercomputers, data centers, and drug development has strengthened its position in the market. The company's chips are also utilized for Bitcoin mining, self-driving electric cars, and metaverse applications. Nvidia's DGX H100 systems have begun shipping, bringing advanced AI capabilities to industries worldwide, including manufacturing, healthcare, and robotics.

Stock Outlook

Despite uncertainties surrounding the global economy and risk of recession, Nvidia's earnings and sales are projected to rebound this year. The stock remains a strong buy as the company continues to expand into high-growth sectors such as data centers, AI, automated electric cars, and cloud gaming.

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