Shares of Nvidia(NASDAQ: NVDA) surged higher on Wednesday, jumping as much as 4.7% to a new all-time high. As of 3:02 p.m. ET, the stock was still up 4.62%.
The catalyst that sent the chipmaker and artificial intelligence (AI) specialist higher was the outcome of the U.S. presidential election and what it means for the future of AI.
Clear momentum
There's no denying the impact of AI on the stock market over the past couple of years, and Nvidia has been a prime example. The company's graphics processing units (GPUs) have become the gold standard for supplying the computational horsepower required to train and run generative AI models. This, in turn, has fueled five consecutive quarters of sales and profit growth of 100% or more.
Wedbush analyst Dan Ives released a missive in the wake of the election results, saying he expects "a strong AI focus out of the gates from Trump for U.S. Big Tech players." He went on to posit that "AI initiatives will ramp in the U.S. ... [which] would be a major tailwind" for players in the space."
Analysts at UBS echoed those thoughts, noting that "AI adoption and monetization have picked up further." They went on to say that thanks to big tech's AI-related spending spree, "the growth story of AI remains robust."
As the de facto poster child for advances in AI, what's good for AI is certainly good for Nvidia.
The future looks bright
To be clear, investors shouldn't expect the triple-digit growth that Nvidia has delivered in each of the past five quarters, but its results will be robust, nonetheless. For its fiscal 2025 third quarter (ended Sept. 29), management is guiding for revenue of $32.5 billion, which would represent growth of 79%, with a commensurate uptick in profits. Furthermore, the upcoming release of its next-generation Blackwell AI-centric processor has already seen extraordinary demand, according to Nvidia, which bodes well for the future.
At 34 times forward earnings, Nvidia stock isn't exactly cheap, but given the company's position as the leading provider of AI chips, I would argue it's worth every penny.
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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.
