Why Nvidia Stock Popped on Tuesday


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Shares of Nvidia (NASDAQ: NVDA) surged higher on Tuesday, jumping as much as 6.3%. As of 1:59 p.m. ET, the stock was still up 5.8%, taking it back above that psychologically important $3 trillion market cap.

The catalyst that sent the chipmaker and artificial intelligence (AI) specialist higher was word that the company was entering an important new market, which could boost future sales.

A vast new market

Nvidia’s graphics processing units (GPUs) have become the gold standard and a key component in the rise of generative AI. These processors provide the computational horsepower necessary to speed the process of AI training and inference, which primarily occurs in data centers.

The company has inked a deal to bring its AI expertise to telecom company Ooredoo in the Middle Eastern country of Qatar. The agreement will provide its customers in Qatar, Algeria, Tunisia, Oman, Kuwait, and the Maldives “direct access” to Nvidia’s AI technology, according to a report by Reuters.

The U.S. government has limits on what technology Nvidia can export to Middle Eastern countries to keep its most sophisticated technology from being accessed by China. The report suggests that Nvidia would comply with the government mandates while also playing an important role in supplying AI chips to the region.

The expansion of AI continues

The news comes in the wake of Nvidia’s most recent blockbuster financial report, continuing its triple-digit revenue and profit growth. This, in turn, has fueled its surging stock price and recent 10-for-1 stock split.

Some investors have expressed concern that the next leg of Nvidia’s growth could stall, and they wonder how far AI has left to run. Most experts concur, however, that the adoption of AI is still in the early innings. Generative AI will become a $1.3 trillion market by 2032, according to estimates provided by Bloomberg Intelligence.

Furthermore, at roughly 35 times forward earnings, Nvidia stock is still reasonably priced, particularly in light of the ongoing opportunity presented by AI.

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Danny Vena has positions in Nvidia. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.

Why Nvidia Stock Popped on Tuesday was originally published by The Motley Fool



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