Stocks to buy

Nvidia (NASDAQ:NVDA) stock stands to benefit immensely from the ongoing AI race. Shares are up 89% since the start of the year. And the momentum is not slowing.

The semiconductor company makes innovative graphics processing units for various applications. Nvidia’s GPUs are particularly well-suited for AI as they can handle large amounts of data in parallel, accelerating the training and inference of deep learning models.

Nvidia holds a commanding position in a fast-growing market. As AI increasingly integrates into various industries, Nvidia’s expertise in the field could lead to further expansion and growth.

Nvidia is in a position to prosper from its presence in the AI hardware and software markets.

Dominating the Enterprise GPU Market

The biggest competitor for Nvidia is itself. Since the generative AI race started, Microsoft’s (NASDAQ:MSFT) recent investment of $10 billion in OpenAI has taken center stage. Research Dive forecasts the chatbot market to generate an estimated annual revenue of $19.5 billion by 2027.

Microsoft launched ChatGPT on the Azure cloud platform to maximize its potential. This positions Microsoft as a major player in the chatbot market and could enable it to capture a substantial share of the growing demand for conversational AI solutions.

Nvidia is providing the foundational technology for companies in the AI race, including Microsoft and Alphabet. It is a win-win scenario for Nvidia.

If you are looking for a more focused take on the competition in the space, Samuel O’Brient’s take is a great place to start.

Nvidia’s Partnerships with AI Leaders

Nvidia and Amazon are collaborating to create a large-scale infrastructure on AWS that can support the development of AI applications.

Meanwhile, Google Cloud is using Nvidia’s L4 Tensor Core GPU, specifically designed to build large generative AI models.

Nvidia and Microsoft are working to bring Nvidia’s DGX Cloud super-computing service to Azure.

That will enable developers to leverage the power of Nvidia’s GPUs on Microsoft’s cloud platform. This collaboration could speed up the development and deployment of AI applications on Azure.

As the demand for AI technologies grows, Nvidia’s client list will also do so. All of this will have a positive effect on the bottom line.

Despite a decline in Nvidia’s gaming segment revenue over the past year, the company’s strong position in the discrete desktop GPU market has left its competitors limited growth opportunities.

The ongoing migration to cloud computing and the rapid adoption of AI bolsters NVDA stock.

According to Research and Markets, the worldwide computing market will reach $1.55 trillion by 2030. Meanwhile, Statista predicts the AI market will grow rapidly in the next decade, reaching nearly $2 trillion by 2030.

Nvidia’s Monopoly-like Position

Nvidia’s monopoly-like position in enterprise GPUs, combined with its partnerships with major tech giants, puts it in an excellent position.

Its chips power the data centers that handle AI workloads, making it a key player in the generative AI market.

As the global cloud computing and AI markets grow, Nvidia’s position will surge. These positive catalysts will continue driving NVDA stock higher.

On the publication date, Faizan Farooque did not hold (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.

Faizan Farooque is a contributing author for InvestorPlace.com and numerous other financial sites. Faizan has several years of experience in analyzing the stock market and was a former data journalist at S&P Global Market Intelligence. His passion is to help the average investor make more informed decisions regarding their portfolio.

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