Nvidia (US:NVDA) designs graphic processing units (GPUs) that underpin almost all of our most exciting computing developments, from artificial intelligence (AI) to data centers and video gaming. Wherever there has been hype in the computing sector in recent years, the GPUs produced by either Nvidia or its rival AMD (US:AMD) are involved.
Tip style
Growth
Risk rating
Medium
Timescale
Long Term
Bull points
- Products underpin data centre growth
- Numerous strong growth trends
- Market dominance in GPUs
- Capital light, highly cash generative
Bear points
- Gaming market slowdown
- Rich rating despite geopolitical tensions
Sitting at the intersection of multiple breakthrough technologies means Nvidia’s share price has been particularly volatile in the last two years. In 2021, low interest rates coupled with the Covid-19 lockdown tailwind to its gaming business led investors to bid up the stock by 130 per cent, to a peak valuation of 71 times forward earnings.