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The Demand Surge Powering Nvidia

January 26, 2024

Not the first time you have heard this from me but this is a hell of a chart. Since 2013 Nvidia shares have been in a strong uptrend. There is no sign that this uptrend has ended; quite the contrary. If we think of the pattern as rise, step, rise, step, we have just begun a new period of rising prices. Who knows where we are going but higher looks likely.

The fundamentals could hardly be more positive.

Nvidia CEO Jensen Huang says demand for artificial intelligence chips continues to boom.

AI is a “rebirth of the industry,” he told reporters in Taiwan on Thursday, emphasizing the nation’s major role in the effort, along with that of partner Taiwan Semiconductor Manufacturing, also known as TSMC. “Last year was the beginning. This year is going to be a huge year.”

Nvidia shares were up 0.6pc to $617 in mid-day trading Thursday. The stock is up 219pc over the last 12 months.

Huang said Nvidia and its suppliers are doing their best to make more chips. “The single greatest challenge in AI, of course, is scaling the capacity of AI. We are very severely supply constrained,” he said. “The demand is very strong. We’re working very hard — TSMC, all of our supply chain partners here, are working very hard to keep up with the demand.”

Nvidia currently dominates the market for chips used for AI applications. Start-ups and larger corporations prefer the company’s products because of its robust programming platform, CUDA, which provides AI-related tools that make it easier to develop AI projects.

Dow Jones Newswires, 25 January 2024

Has a company of this size ever in history experienced a growth charge like this? Even against this background, the shares go up and down; that is what shares do but as we can see from the chart what they mostly do is go up and I expect that to remain the pattern for the foreseeable future. This is a classic buy-and-hold share. If by some incredible chance you still don’t have any it is still not too late to buy. In the last 12 years, there have only been two years when the shares failed to end the year higher than they started. I know what I expect to happen in 2024 and 2025 for that matter. I have never seen a business on such a roll.

Picture of a Demand Explosion

There is just so much exciting stuff going on at Nvidia.

Innovation continues at a searing pace.

Just look at what is happening to compute power.

I could go on and on with these incredible slides. Nvidia is such an astonishing company it leaves me stunned.

Strategy – Buy Nvidia

There has never been something so screamingly obvious in investment as the attractiveness of Nvidia in a world of accelerating technology and Generative AI. The company has been building for decades to its current position at the heart of the technology revolution. Imagine if Nvidia was a private company planning an IPO in this climate. The buying frenzy for the shares would be insane.

Being this exciting an investment does bring problems. Day traders will be climbing aboard ahead of Q4 figures, due on 21 February, which are expected by every man, his dog, his cat, his mouse and the fleas on these animals to be amazing. This huge short-term position will have to be unwound. Maybe, however good the figures and however exciting the statement, the shares will fall. They may even fall sharply. Doesn’t mean a thing. On any kind of longer-term perspective, these shares are headed higher, most likely much higher. What is needed with this stock at this moment is belief, belief that it can deliver, and can capitalise on the amazing opportunities facing the business.

Almost whatever happens these shares are a buy!

Share Recommendations

Nvidia. NVDA. Buy @ $612.50

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