Nvidia’s Q4 earnings report and the subsequent surge in its market capitalization to $2 trillion have captured the attention of investors worldwide, including those in India. The company, now considered the cornerstone of artificial intelligence (AI) development, has seen its stock rise by 16 percent in the last five days and an astonishing 63 percent since the start of the year.
The question remains: should investors still consider purchasing Nvidia’s stock amidst this remarkable growth? According to Gupta, Nvidia serves as a leading indicator for advancements in machine learning (ML) and AI. The US-based chipmaker has dominated headlines in recent days following another outstanding quarter, propelling its market cap above $2 trillion and securing its position as the fourth most valuable company globally.
Notably, Nvidia’s GPUs (graphics processing units) power 80 percent of the hardware utilized in training large language models (LLMs). Gupta suggests that monitoring the demand for Nvidia’s chips offers insights into the trajectory and speed of AI development.
According to Gupta, AI in India is currently in its nascent stage but is poised at a crucial turning point. While Nvidia currently enjoys a monopoly, other tech giants such as Microsoft, Amazon, and Google, who are Nvidia’s customers, are also venturing into creating their own chips. Additionally, various other chipmakers are striving to develop their products.
Gupta cautions about the potential competition but emphasizes the complexity of replicating Nvidia’s success. He states, “One needs to be cautious about the competition entering the market, but this isn’t a simple task to replicate. It’s quite challenging and will take several years. It’s not akin to developing a phone, which involves mostly assembling existing components.”
For Indian investors seeking to capitalize on Nvidia’s growth, Gupta recommends direct exposure through a global brokerage rather than ETFs. He suggests, “While ETFs are an option, given Nvidia’s $2 trillion market cap, the exposure they offer is minimal. If you’re committed to investing in Nvidia, it’s better to go through a global brokerage, which is quite accessible today.”
Vikas Gupta, CEO and chief investment strategist at Omniscience Capital, advises new investors against rushing into purchasing Nvidia stock. Instead, he suggests utilizing this time to thoroughly study the company and comprehend the AI development landscape. Gupta emphasizes the importance of understanding the entire AI ecosystem, from semiconductors to cloud providers to service providers, to identify potential valuation opportunities. He concludes, “There’s no urgency to act immediately. Allow the hype to settle down and use this time to delve deeper into understanding the AI ecosystem.”
He further noted that in the coming months, weeks, or even quarters, investors will find the opportune moment to invest in the stock. Nvidia’s stock has surged from $678 before earnings to $787 as of the latest closing price on February 27.
