Nvidia crosses into $1 trillion market cap: Time to buy for Indian investors?

On May 30, Nvidia Corporation ascended to the elite league of US companies boasting a $1 trillion market capitalization, propelled by the burgeoning interest in its stock, a top performer in the ongoing Artificial Intelligence (AI) surge.

Nvidia’s stock price has multiplied threefold in less than eight months, demonstrating the intensifying fascination with AI in the wake of substantial advancements in generative AI. This emerging technology enables human-like conversations and is capable of creating diverse outputs, ranging from humor to verse.

Since October, Nvidia’s market value has rocketed approximately 240%, significantly outpacing the broader S&P 500 index. This upward trend has catapulted Nvidia’s valuation beyond its competitors. However, some market pundits argue that given the ongoing AI revolution, Nvidia could be even more valuable.

The value of Nvidia’s shares ascended by up to 7.7% in the early US trading hours, propelling the company well beyond the $1 trillion threshold before tapering off slightly. Only four other US entities—Alphabet Inc., Amazon.com Inc., Apple Inc., and Microsoft Corp.—enjoy the trillion-dollar valuation club membership, a distinction shared by fewer than ten corporations globally. On Tuesday, Nvidia’s stock concluded the day at $401.11, marking nearly a 3% uptick on Nasdaq.

Headquartered in California, Nvidia Corporation is a global tech giant specializing in the production of graphics processing units (GPUs), crafting application programming interfaces (APIs) for data science and high-performance computing, and developing system-on-a-chip units (SoCs) for mobile computing and automotive sectors.

FAANG—an acronym that represents Facebook, Amazon, Apple, Netflix, and Google—encompasses the highly sought-after tech stocks on Wall Street. These companies have also garnered the attention of Indian investors due to their widespread popularity. Market observers now anticipate Nvidia Corp joining this prestigious lineup. As Nvidia’s stock continues to bask in the limelight following its spectacular performance, the question that arises is whether Indian investors should consider investing in it. Let’s delve into what the experts recommend.

Ashish Ranawade, Emkay Wealth’s Product Chief, posits an interesting question for Indian investors: where else could they discover businesses in India conducting advanced work in AI/ML, Advanced Materials, Space technologies, nanotechnology, or biotech? Ranawade suggests that the answer lies in the USA and Nasdaq, where many such innovative companies can be found. Observing that the US market experienced significant downturns in November and again in March this year, he has been advising investors to explore US equities and ETFs, with Mirae Asset FANG+ ETF emerging as a top recommendation. Nvidia is one of ten equally weighted stocks in the fund, which has shown robust growth in the past two months.

While Nvidia’s future performance may not match its recent exceptional growth, Ranawade argues that there are numerous other worthwhile stocks listed on the Nasdaq in the US that are worth considering.

According to Vinit Bolinjkar, Ventura Securities’ Head of Research, Nvidia’s robust performance in the US markets makes it a compelling investment for Indian investors.

Nvidia, a preeminent producer of supercomputers and AI-specific data center chips, is well-positioned for triumph in the rapidly expanding AI sector. The company’s succession of recent product launches has boosted its stock performance, making it an enticing choice for inclusion in the portfolios of Indian investors.

Significant unveilings include the DGX GH200 AI supercomputer platform, anticipated to empower tech firms to design advanced iterations of ChatGPT. Major corporations such as Microsoft Corp, Meta Platforms Inc, and Alphabet Inc are predicted to be the inaugural users of this revolutionary product.

Additionally, Nvidia has established a strategic alliance with WPP Plc to utilize AI and the metaverse to lower advertising production costs. Furthermore, the debut of Nvidia ACE for games, which uses AI to augment the visual quality of non-player characters, signifies Nvidia’s transition from being solely a graphics chip manufacturer to a key contributor to the AI revolution.

Nvidia’s exceptional performance, consistently exceeding analyst projections by a considerable degree, can largely be credited to the burgeoning demand for data center chips,” according to Vinit Bolinjkar. As tech behemoths like Microsoft Corp, Meta Platforms Inc, and Alphabet Inc endeavor to create services mirroring OpenAI Inc.’s ChatGPT chatbot, the need for extensive computational capabilities escalates. Nvidia distinguishes itself by not only providing state-of-the-art hardware for data centers, but also by manufacturing its own supercomputers.

Given the nascent state of the AI industry and the significant strides yet to be made, Bolinjkar expects this trend to continue for a considerable duration. Thus, he suggests that Indian investors might find it beneficial to incorporate Nvidia into their investment strategies, thereby leveraging the firm’s vanguard position in the AI explosion.

Avinash Gorakshakar, Head of Research at Profitmart Securities, presents a similar perspective. He notes that Nvidia, a manufacturer of video game computer chips, has unexpectedly emerged as a pivotal player amidst the AI surge, edging close to a trillion-dollar market capitalization.

Gorakshakar predicts, “Given the robust growth anticipated in the AI market and Nvidia’s formidable business division, Indian investors can indeed consider incorporating this stock into their portfolios for the long haul. The consistent growth narrative has only just begun and is expected to unfold robustly over the forthcoming 2 to 3 years.

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