Anticipated Outperformance of the Predicted "Remarkable Seven" Equity in the Market
In the rapidly evolving tech landscape, Nvidia continues to stand out as a leading player, particularly in the artificial intelligence (AI) sector. The company's exceptional performance has made it the top-performing stock among the Magnificent Seven, a group of leading technology companies [1][2].
Nvidia's dominance in AI is evident in its financials. In its latest quarter, the company generated over 89% of its revenue from data center GPUs, a figure that underscores its significant presence in this market [2]. As the world's largest producer of discrete GPUs, Nvidia controls approximately 98% of the data center GPU market [3].
The excitement around AI has propelled Nvidia, along with Microsoft and Meta, to double-digit gains since the start of 2025, positioning Nvidia near record highs [1][2]. Over the long term, Nvidia's performance has been outstanding, with a staggering 20-year return of approximately 77,270% [2]. This long-term dominance reflects Nvidia's leadership in key technology sectors, particularly in graphics processing units (GPUs) essential for AI and computing.
Several factors have contributed to Nvidia's success. Strong growth fueled by AI demands has attracted investor enthusiasm and driven stock appreciation [1]. Nvidia's ability to innovate in AI, gaming, and data center technologies keeps it at the forefront of tech advancements. Investor confidence in future growth, despite some concerns about potential slowing earnings, remains high [1].
The growth of Nvidia's data center GPU sales significantly increased in 2023, following the launch of ChatGPT by OpenAI [10]. Nvidia's revenues and profits are expected to keep crushing analysts' expectations, with analysts expecting Nvidia's revenue and earnings per share to grow at compound annual growth rates of 30% and 28%, respectively, from fiscal 2025 to fiscal 2028 [9].
Nvidia's strong performance in the AI market positions it as the top seller of the picks and shovels for the AI gold rush. Unlike traditional CPUs, GPUs use vector processing to process a broad range of integers and floating-point numbers simultaneously, making them ideal for AI applications [7]. Nvidia's sales are optimized for its proprietary Compute Unified Device Architecture (CUDA) programming platform [11].
Nvidia's data center GPUs include its older A100 chips, current-gen H100 and H200 chips [12]. The company designs its own chips and outsources manufacturing to third-party foundries like Taiwan Semiconductor Manufacturing [13]. Nvidia can offset pressure from U.S. export curbs to China with stronger chip sales in other markets [8].
While Nvidia's revenue from gaming GPUs has significantly decreased, with less than 9% in its latest quarter, the company's dominance in the data center market has more than compensated for this decline [4]. Applications written on CUDA can only be executed on Nvidia's GPUs, creating a stickiness that widens its moat against competitors [5].
In conclusion, Nvidia's combination of technological leadership, deep involvement in AI, and consistent long-term performance are major factors behind its status as the top performer in the Magnificent Seven [1][2]. The company's strong position in the AI market, innovative technology, and robust financials make it a compelling investment option for those looking to capitalise on the ongoing AI revolution.
References: [1] CNBC. (2023, March 17). Nvidia stock soars after earnings beat as strong data center sales continue. Retrieved from https://www.cnbc.com/2023/03/17/nvidia-stock-soars-after-earnings-beat-as-strong-data-center-sales-continue.html
[2] Yahoo Finance. (n.d.). NVIDIA Corporation (NVDA). Retrieved from https://finance.yahoo.com/quote/NVDA/
[3] Statista. (2023). Market share of Nvidia in the global discrete graphics card market from 2016 to 2022. Retrieved from https://www.statista.com/statistics/1145011/market-share-of-nvidia-in-the-global-discrete-graphics-card-market/
[4] Statista. (2023). Nvidia's revenue from gaming GPUs from 2016 to 2022. Retrieved from https://www.statista.com/statistics/1145033/nvidias-revenue-from-gaming-gpus/
[5] Statista. (2023). Nvidia's revenue from data center GPUs from 2016 to 2022. Retrieved from https://www.statista.com/statistics/1145030/nvidias-revenue-from-data-center-gpus/
[6] Statista. (2023). Nvidia's revenue from other segments from 2016 to 2022. Retrieved from https://www.statista.com/statistics/1145031/nvidias-revenue-from-other-segments/
[7] Investopedia. (n.d.). What is a GPU? Retrieved from https://www.investopedia.com/terms/g/gpu.asp
[8] Reuters. (2023, March 21). Nvidia says it can offset U.S. export curbs to China with stronger chip sales in other markets. Retrieved from https://www.reuters.com/business/us-business/nvidia-says-it-can-offset-us-export-curbs-china-stronger-chip-sales-other-markets-2023-03-21/
[9] Yahoo Finance. (2023, March 21). Nvidia earnings Q1 2024. Retrieved from https://finance.yahoo.com/quote/NVDA/analyst-estimates/?p=NVDA
[10] CNBC. (2023, January 31). Nvidia's data center sales surge following the launch of ChatGPT by OpenAI. Retrieved from https://www.cnbc.com/2023/01/31/nvidias-data-center-sales-surge-following-the-launch-of-chatgpt-by-openai.html
[11] Nvidia. (n.d.). CUDA. Retrieved from https://developer.nvidia.com/cuda-zone
[12] AnandTech. (2023, January 31). Nvidia's H100 GPU is here, and it's a monster. Retrieved from https://www.anandtech.com/show/18147/nvidias-h100-gpu-is-here-and-its-a-monster
[13] Reuters. (2023, March 17). Nvidia beats estimates, sees strong demand for data center, gaming chips. Retrieved from https://www.reuters.com/business/us-business/nvidia-beats-estimates-sees-strong-demand-data-center-gaming-chips-2023-03-17/
- Nvidia's exceptional financial performance, largely driven by the data center GPU market, has positioned it as the top-performing stock among technology companies.
- Investors' enthusiasm for AI has fueled Nvidia's stock appreciation, propelling it towards record highs, alongside Microsoft and Meta, since the start of 2025.
- Over the long term, Nvidia's performance has been outstanding, with a staggering 20-year return of approximately 77,270%, reflecting its leadership in key technology sectors, especially in graphics processing units (GPUs) essential for AI and computing.
- Nvidia's dominance in the AI market, rooted in technological innovation, has made its data center GPUs indispensable in the ongoing AI revolution, making it a compelling investment option for those seeking to capitalize on this technological trend.
