Key Points
Corporate spending on AI doesn't show signs of slowing anytime soon.
Nvidia is widening its competitive lead in the AI market with its investment in advanced computing systems.
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Shares of Nvidia (NASDAQ: NVDA) are up about 47% over the past year. The current cycle of spending on chips and data centers, which has benefited Nvidia in recent years, doesn't appear to be slowing anytime soon.
Google parent Alphabet just said it will spend at least $175 billion in capital expenditures this year to support demand for artificial intelligence (AI).
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However, Nvidia is not entirely reliant on selling powerful chips to AI hyperscalers, including Google. Nvidia has an opportunity to expand its market potential by delivering advanced computing systems to other industries that may undervalue its future growth.
Image source: Nvidia.
The World Health Organization expects a shortage of millions of healthcare providers by 2030, and Nvidia is providing the computing backbone that could help fill that gap. It's partnering with Thermo Fisher Scientific to build an AI lab computing system powered by its DGX Spark supercomputer. This lays the groundwork for agentic AI systems to autonomously run experiments and complete other lab work.
This positions Nvidia to gain a foothold in the life sciences industry, which spends about $300 billion annually on research and development.
Nvidia is not just a chip supplier. It's a systems and solutions provider. This further differentiates Nvidia from custom chip designers like Broadcom that some investors see as a threat to Nvidia's AI chip dominance. Nvidia is helping enterprises solve complex problems, which makes it an indispensable partner.
For investors, that matters because the stock's valuation looks attractive, trading at 24 times this year's consensus earnings estimate. That's a steal, with Wall Street analysts expecting Nvidia's earnings to climb 57% this year. The recent dip could provide an excellent buying opportunity before the stock surges to new highs later this year.
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John Ballard has positions in Nvidia. The Motley Fool has positions in and recommends Alphabet, Nvidia, and Thermo Fisher Scientific. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
