A Stock Set for the Digital World’s Next Decade (NVDA)

A GPU for All Seasons

One stock that’s emblematic of the powerful shift that has brought us where we are in this Digital Age is NVIDIA (NASDAQ: NVDA).

In the early days of the digital revolution, it was all about central processing units (CPUs). They were the brains of the computers integrating and disseminating code to various, discrete processing chips to do their work and then send it back to be organized and displayed.

CPUs are still an extremely important aspect of computing, but as the industry matured and CPUs became more powerful, software became more sophisticated. It was becoming possible to process more information to build out easier interfaces with the people using the machines. This also meant more people could use computers, not just technical people, and the more democratized computing became, the more demand for deeper visual experiences grew.

That’s where NVDA comes into the picture.

 

Source: NVIDIA

 

Launched in 1993, it specialized in graphic processing units (GPUs). They basically translate data into images. While computers always had GPUs, NVDA was building high-end GPUs for specialized, high-end clients, like research labs and government agencies that wanted very specific qualities that most GPU makers didn’t really offer.

It was a good niche business.

As the internet grew, and then the mobility revolution grew, the demand for GPUs started to expand downstream. Now gaming, streaming, and live conferencing have become more widely adopted.

 

Every Advance an Opportunity

When wireless technologies provided enough bandwidth, a new demand was created for mobile devices as well. NVDA’s market was expanding rapidly, and its GPUs, while still premium products, were finding more and more customers.

 

Source: Shacknews

 

The image above is what an Ethereum mining operation looks like. GPUs, especially NVDA GPUs, were the go-to chips for mining cryptocurrencies. When it comes to autonomous driving and smart vehicles, NVDA was filling that need early on.

 

Source: NVDIA

 

NVDA is also a leader in artificial intelligence as well. In the image below, one of NVDA’s GPUs took the sketch on the left and created the “photograph” on the right.

 

Source: PDN Online

 

These are just the tip of the iceberg. GPUs are becoming as important, if not for the end user, certainly for the companies that are delivering services to the end user. That’s a massive market that is constantly looking to top what it has done previously to deliver better and richer experiences to customers.

 

The GPU Market Is Still Young…and Thriving

The point is, at every turn in the Digital Age, NVDA has correctly anticipated the next place to be to take advantage of new technologies and how best to meet that demand. Because it started as a niche player where innovation was always crucial, it remains a significant leader in this sector, especially when it comes to high-end, high-margin GPUs.

 

Source: t4.ai

 

The above graph shows how fast this sector is growing, expanding more than four times in just a decade, and there’s plenty more to come.

 

The Great Opportunity

The thing is, while the technology and demand continues to grow, demand is currently outstripping supply because of the supply chain issues. That problem is a good one for investors. This is what the past decade looks like for NVDA stock.

 

 

Even its performance this year has had little effect on its overall long-term performance. I mean, are you going to wring your hands over a brief 42% pullback when you’ve scored a 5000+% gain?

This is an ideal time to start to accumulate NVDA shares. As you can see from the chart above, the last time it corrected it not only gained what it lost back, but continued to soar to even higher highs. That’s exactly what I expect will happen this time around. This is a MegaTrend stock that will continue to deliver for years to come, and this is a great opportunity to move into it at a rare discount.

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