Is It Too Late to Buy Nvidia Stock? Evidence Is Piling Up That Provides a Compelling Answer.

There are no two ways about it: The dawn of the artificial intelligence (AI) revolution in early 2023 has been a windfall for chipmaker Nvidia (NASDAQ: NVDA). The company pioneered the graphics processing units (GPUs) that have become the gold standard for a variety of use cases by providing the computational horsepower needed to underpin video games, data centers, and even earlier versions of AI.

Generative AI went viral early last year, with Nvidia at the heart of what many are calling the next industrial revolution. The results have been striking: Nvidia stock is up more than 800% since the start of 2023 and hovers less than 2% off its all-time high (as of this writing) -- but it's been a bumpy ride. Nvidia stock lost as much as 27% during the four weeks starting in early July but has rebounded vigorously, gaining nearly all that back over the past month.

Causing the recent decline were fears that demand for AI could dwindle, and a great deal of future growth was already baked into the stock price. That said, there's mounting evidence that answers the question: Is it too late to buy Nvidia stock?

Faltering demand, or the calm before the storm?

What distinguishes generative AI from its predecessors is the need for not only massive amounts of data, but also the corresponding computational horsepower needed to parse the data. When it comes to AI-centric processors, Nvidia is without equal, controlling an estimated 98% of the market in 2023, similar to its share in 2022, according to semiconductor analyst company TechInsights. This dominance put Nvidia in pole position when generative AI burst on the scene.

The unprecedented demand fueled triple-digit revenue and profit growth for Nvidia for five successive quarters. So, when the company forecast only 79% growth for its fiscal 2025 third quarter (which ends in late October), some investors saw the writing on the wall. They concluded that demand was ebbing and they headed for the exits, but that move was likely premature -- and costly. The evidence is growing that demand for AI continues unabated.

Super Micro Computer, commonly called Supermicro, provided one piece to the demand puzzle on Monday. In a press release, the company revealed that it had delivered more than 2,000 direct liquid-cooling (DLC) rack systems since June and was currently shipping more than 100,000 GPUs per quarter. Shipments of that magnitude suggest that demand for Nvidia's GPUs remains robust.

Nvidia CEO Jensen Huang provided some boots-on-the-ground commentary as well. In an interview late last week, the chief executive said that demand for Blackwell -- the company's next-generation AI platform -- is "insane." He called this the "first wave of AI," which started with the modernization of $1 trillion worth of existing data centers, upgrading them with chips capable of processing generative AI. Huang went on to say that the next phase -- the "biggest wave of AI" -- will involve "companies using AI to be more productive." These comments suggest that the AI boom has only just begun.