What's Going On With Nvidia Stock On Monday?

Author: Anusuya Lahiri | August 12, 2024 12:43pm

Nvidia Corp (NASDAQ:NVDA) stock is trading higher on Monday.

Ken Mahoney, president and CEO of Mahoney Asset Management, told Bloomberg that Nvidia’s valuation has dropped to around 30 times forward earnings after the recent selloff, which could make the stock more appealing to long-term investors.

The analyst said that the key artificial intelligence beneficiary stock has been up 152% in the last 12 months despite losing ~15% in the previous 30 days.

Nvidia’s success reflects its success in building a “walled garden” of developers who build AI systems and other software with its chips, the Wall Street Journal reports. 

This ecosystem, centered around Nvidia’s software platform CUDA, has made it nearly impossible for competitors to gain significant ground in the AI market.

Nvidia will likely have more leverage than its rivals as it continues to concentrate on its coding adeptness.

CUDA, launched in 2007, allows Nvidia’s specialized chips, GPUs, to run non-graphics software, including AI applications.

Jensen Huang, Nvidia’s CEO, describes this approach as “full-stack computing,” where the company provides the chips and the software necessary to build AI systems.

This strategy has solidified Nvidia’s position as the dominant player in the AI chip market, with an estimated 90% market share expected to continue for the next few years.

The AI chip market is projected to reach $400 billion annually by 2027.

Investors can gain exposure to Nvidia through VanEck Semiconductor ETF (NASDAQ:SMH) and Schwab U.S. Large-Cap Growth ETF (NYSE:SCHG).

Price Action: NVDA shares traded higher by 5.30% at $110.24 at the last check on Monday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

Image via Nvidia Blog

Posted In: NVDA SCHG SMH