This 1 Chart Shows Why Nvidia Is the Top “Magnificent Seven” Stock to Hold Forever

Nvidia (NASDAQ: NVDA) did it again. For the third straight quarterly period, the company blew past management’s own revenue guidance by more than $2 billion. The technology company is the clear leader in advancing the many uses of artificial intelligence (AI).

For Nvidia’s fiscal 2024 fourth quarter ended Jan. 28, the company reported sales of $22.1 billion. That’s an increase of 265% versus the year ago period, and well above the prior guidance of $20 billion.

Nvidia and the AI boom

This one chart pretty much tells the whole story:

Last year marked an explosion in sales for the data center segment that includes advanced AI chips. Three of Nvidia’s four business segments increased revenue year over year in its fourth quarter, with automotive being the only laggard. But the data center segment is the focus right now. Data center revenue was more than 400% higher than the prior year period.

The company believes that escalation will continue as management believes total sales will be about $24 billion in the current quarter. These are also high margin products. In its full fiscal year 2024, gross profit margin expanded to almost 73% compared to just 57% in fiscal 2023. That’s expected to continue to rise to more than 76% in the current fiscal 2025 first quarter.

Of course investors have noticed these astounding numbers and Nvidia stock has rocketed higher along with its sales and earnings.

While there will likely be ups and downs in the stock, it still doesn’t look overly expensive. That’s because of the still-accelerating growth. While a forward price-to-earnings (P/E) multiple of 32 is pricey by traditional standards, that metric could decrease quickly as earnings expand.

And the company still has potential for other areas to balloon. The previously mentioned automotive segment could grow quickly if self-driving vehicles become more mainstream. That’s just one more reason to ensure Nvidia has a place in the growth stock portion of any portfolio.

Should you invest $1,000 in Nvidia right now?

Before you buy stock in Nvidia, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Nvidia wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than tripled the return of S&P 500 since 2002*.

See the 10 stocks

*Stock Advisor returns as of February 20, 2024

Howard Smith has positions in Nvidia. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.

This 1 Chart Shows Why Nvidia Is the Top “Magnificent Seven” Stock to Hold Forever was originally published by The Motley Fool

Source link