Stock Market

NVDA Stock Update: What Nvidia Investors Need to Be Watching Now

Investors remain confident in Nvidia (NASDAQ:NVDA) stock’s strong position in the generative AI race, despite US-China tensions. NVDA stock has risen 3% in July, outperforming the Nasdaq Index, and has surged 200% this year, reaching a market cap over $1 trillion.

While investors are bullish on Nvidia’s potential, there are several key points they should watch closely.

Recently on Nvidia

Nvidia leads the AI space with its powerful chips for OpenAI’s ChatGPT platform, securing key chip deals with ServiceNow (NYSE:NOW) and Snowflake (NYSE:SNOW).

The company’s strong demand led to an upward revision in its guidance, with expected second quarter revenue of around $11 billion. Wall Street estimates put Nvidia’s second quarter sales at $11.02 billion.

Investors are eagerly awaiting Nvidia’s earnings report, anticipating a significant positive guidance. Analysts project a $1 billion increase in sales from the second to the third quarter.

However, recent reports of potential export curbs on AI chips to China caused a temporary dip in Nvidia’s market cap, which fell below $1 trillion.

Nvidia and Recursion Pharmaceuticals

Wall Street is abuzz with the news of Nvidia’s $50 million investment in Recursion Pharmaceuticals (NASDAQ:RXRX). The biotech company’s stock surged over 120% following the announcement, propelling its market capitalization to nearly $1 billion.

With Nvidia’s AI capabilities and Recursion’s powerful dataset, they aim to revolutionize biology and chemistry models.

The terms of the deal remain undisclosed, but the impact is already evident, with RXRX reaching its highest share price since November 2022 at $11.

Recursion Pharmaceuticals, based in Utah, possesses a vast and expanding database of biological and chemical datasets, exceeding 23,000 terabytes.

Leveraging advanced technology and automation tools in biology and chemistry, Recursion aims to accelerate the pace of drug discovery in the future.

With a focus on long-term goals, the company believes in utilizing AI models to enhance analytical efficiency and expedite the drug development process.

Why Nvidia Remains Worthy

Nvidia continues to make waves in the semiconductor industry, as analysts from KeyBanc raise their stock price target to $550 from $500.

The company’s success is driven by its position in artificial intelligence and the demand for its graphics processing units in deep learning applications. However, concerns about the sustainability of the stock’s meteoric rise persist, given its overheated valuation.

Wall Street analysts strongly support Nvidia because of the rapid growth of the AI industry, which reached a value of $136.55 billion in 2022 and is projected to grow at a CAGR of 37.3% from 2023 to 2030, potentially reaching revenue exceeding $1.8 trillion.

Nvidia dominates the AI chip market with an 80% share and its products are widely used by major players like Google and Microsoft.

The demand for AI chips is soaring, leading to Nvidia’s impressive first-quarter results and strong Q2 guidance. Analysts have raised their price targets for Nvidia, suggesting further upside potential.

On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.

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