Nvidia, the dominant force in the AI revolution, and its growth trajectory continues to outshine even the most optimistic projections.
As the company prepares to release its Q3 FY2024 results, investors are not merely asking if Nvidia can sustain its extraordinary momentum—they are pondering just how much further it can climb.
After all, it has already surpassed a $3.5 trillion market cap and delivered revenue growth at a pace that seems almost mythical. The answer? The upside is far from over.
The company’s Q2 results were staggering, with revenues reaching $13.51 billion, up an eye-watering 101% year-over-year.
This momentum is expected to carry forward, with consensus estimates for Q3 pegged at $18 billion in revenue—an extraordinary 206% annual increase. Nvidia’s data centre business, fuelled by unrelenting demand for its H100 GPUs, continues to drive the lion’s share of this growth.
Analysts project this segment alone could post a 279% surge year-over-year, solidifying Nvidia’s role as the backbone of generative AI deployment worldwide.
So, why should investors remain bullish even as Nvidia navigates uncharted territory?
First, its core markets are expanding at an astonishing pace. Generative AI, once a nascent industry, is now a driving force across virtually every sector.
Nvidia’s GPUs remain the industry standard for training and deploying large language models, giving it a near-monopoly in AI hardware. Despite growing competition from companies like AMD and startups developing custom chips, Nvidia’s 80%-plus market share in AI accelerators seems unshakable.
Second, Nvidia’s ability to innovate ensures it stays ahead of the curve. The launch of its next-generation H200 GPUs in 2024 is expected to further consolidate its dominance. Early previews suggest a massive performance boost over the already market-leading H100 series.
Additionally, Nvidia’s software ecosystem, including the CUDA platform and AI-specific libraries, creates a near-insurmountable barrier to entry for competitors. In this way, Nvidia isn’t just selling chips; it’s selling an entire infrastructure.
Critics may point to challenges, such as the US-China trade restrictions, which could affect up to 25% of the firm’s data centre revenue. However, the company’s geographic diversification and the insatiable global demand for AI technologies render such obstacles manageable.
Nvidia has shown an uncanny ability to pivot and expand into new markets, including India and the Middle East, where AI adoption is accelerating rapidly. This adaptability ensures it continues to thrive even amid geopolitical uncertainties.
Another area of immense potential lies in Nvidia’s move beyond traditional GPUs. The company is making significant inroads into the CPU market and automotive AI, both of which represent multi-billion-dollar opportunities.
Its Drive platform, for instance, is poised to dominate the self-driving car industry, which could be a key revenue driver over the next decade. Also, its Omniverse platform is pioneering the development of digital twins and metaverse applications, further diversifying its revenue streams.
But perhaps the most compelling reason to remain optimistic is Nvidia’s ability to defy economic gravity.
While other tech giants have struggled with slowing growth or diminishing margins, Nvidia has consistently delivered on both fronts. Its gross margins now exceed 70%, a testament to its pricing power and operational efficiency.
This financial muscle gives it the ability to outspend competitors in R&D, ensuring it stays ahead of technological trends.
Looking ahead, the AI boom is showing no signs of fatigue. Gartner predicts the AI market will grow to $2 trillion by 2030, and Nvidia is uniquely positioned to capture the lion’s share of this value.
Whether through partnerships with cloud providers like AWS and Google Cloud or expanding its footprint in enterprise AI, Nvidia has built an ecosystem that feels indispensable.
The market has rewarded this dominance handsomely. Nvidia’s stock is up over 240% year-to-date, far outpacing broader indices like the S&P 500.
While some might worry about valuation concerns, Nvidia’s growth story justifies its premium. This is not a company with fleeting relevance; it is a foundational pillar of the next technological era.
This firm embodies the rare intersection of innovation, market leadership, and financial performance. While it faces challenges, they pale in comparison to the opportunities ahead.
For investors, this isn’t just a passing trend—it’s a long-term play on the future of technology. Expect the surprises to keep coming and expect them to be positive.
Nigel Green is deVere CEO and Founder
Also published on Medium.
