What happened
Nvidia's (NASDAQ: NVDA) share price rallied 4.9% on Tuesday after Swiss investment bank UBS named the chipmaker one of its top stock picks for the year ahead.
So what
UBS analyst Timothy Arcuri believes Nvidia is building a wide competitive moat around its business. The semiconductor titan has established itself as a powerful force in the rapidly expanding graphics processing unit (GPU) market. Soaring demand in areas such as gaming and data centers is fueling Nvidia's growth, which UBS expects to continue for the foreseeable future.
After a steep decline from its highs in November, Nvidia's stock price recovered some of its recent losses on Tuesday. Image source: Getty Images.
Nvidia's revenue surged 50% year over year to $7.1 billion in its fiscal 2022 third quarter, which ended on Oct. 31. A 55% jump in data center sales and a 42% increase in gaming revenue helped power the chip giant's results.
"The third quarter was outstanding, with record revenue," CEO Jensen Huang said in the company's earnings release. "Demand for Nvidia AI is surging, driven by hyperscale and cloud scale-out, and broadening adoption by more than 25,000 companies."
All told, Nvidia's adjusted net income rocketed 62% to $3 billion.
Now what
Incredibly, Nvidia has another massive growth opportunity in addition to its core gaming and data center markets. Huang wants Nvidia to become a leader in the metaverse. To do so, the company is investing heavily in its AI-powered Omniverse platform.
Nvidia intends to help its customers create virtual simulations and robotic applications for a broad range of jobs. Huang expects robust demand for these cutting-edge technologies among its client base. And with an anticipated annual licensing fee of $1,000 per user, some analysts peg the addressable market for Nvidia's Omniverse initiatives at a staggering $80 billion.
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Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool owns and recommends Nvidia. The Motley Fool has a disclosure policy.
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