The US stock market, especially tech stocks, are always prone to bubbles. Some people say $NVIDIA Corp(NVDA)$ 's stock has all the makings of a bubble: a whopping 206% surge in the past 12 months and a sky-high static P/E ratio of 77.1.
But let me tell you, this AI stock is actually undervalued! Yes, you heard me. And the reason behind this isn't some gimmick. It's AI, the core driver. NVIDIA's growth story is just getting started, and AI is going to revolutionize the world.
So, here are five key reasons why NVIDIA's stock price will continue to soar in the coming years:
First off, people still don't realize the true power and disruptive force of AI. Wait till Apple integrates AI into its ecosystem and Amazon makes Alexa even smarter. When consumers start experiencing the benefits of AI in their daily lives, demand for AI products and services will explode, boosting the revenues of companies like NVIDIA that provide AI infrastructure.
Second, the pace of AI development is accelerating. This exponential growth in computing power is leading us to a series of "Gutenberg moments". Such rapid innovation means competitors may not have time to challenge NVIDIA's dominance in AI GPUs. The window of opportunity for rivals like $Advanced Micro Devices(AMD)$ and $Intel(INTC)$ is closing fast.
Third, the AI arms race between US tech giants and even China won't give developers time to create alternative ecosystems. The race for AGI is on, and NVIDIA's superchips like Blackwell are the main drivers of this transformation. Companies and countries are scrambling for AI dominance, and NVIDIA's technology will remain in high demand.
Fourth, the AI era won't follow the rules of previous transformations like the internet or the automotive industry. AI has the potential to fundamentally change human society, and it'll happen sooner than you think. Traditional valuation metrics and historical precedents may not fully apply to pioneering companies like NVIDIA.
And finally, the application potential of AI is virtually limitless, spanning industries like healthcare, finance, and transportation. As AI becomes more sophisticated and ubiquitous, it'll create new markets that we can't even imagine now. NVIDIA, with its cutting-edge AI technology and growing customer base, will be the biggest beneficiary. So, NVIDIA is NOT a bubble stock. It's a rocket ship, ready to take off!
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