Proactive Investors - ARK Invest has done well out of NVIDIA Corporation (NASDAQ:NVDA), the chip maker that is up about 80-fold since 2014, when at $5 most investors saw it simply as a PC gaming chip stock.
In contrast, @ARKInvest’s first principles research pointed to the company as the premier equity play on artificial intelligence (AI), the investment management firm's founder and CEO Cathie Wood Tweeted Monday.
In 2014, most investors considered $NVDA, priced at ~$5, simply a PC gaming chip stock. In contrast, @ARKInvest’s first principles research pointed to #Nvidia as the premier equity play on #AI. Now up ~80-fold, investors seem to think NVDA is the only AI play. It is not! https://t.co/RzII3KMCGu— Cathie Wood (@CathieDWood) May 29, 2023
Now, these investors seem to think it is the only AI play.
“It is not!”, she stated.
“Since 2014, @ArkInvest has believed that Nvidia saw the AI future before most other chip companies, and now we believe it will continue to power the AI age,” Wood said. “At 25X expected revenue for this year, however, $NVDA is priced ahead of the curve.”
The latest surge in NVIDIA’s shares came last week after it reported first-quarter fiscal 2024 earnings that zoomed past expectations.
The company posted revenue of $7.2 billion, well above the consensus analyst expectation of $6.5 billion.
While Gaming revenue for the quarter declined 22% year-over-year to $2.2 billion, Record Data Center revenue of $4.3 billion was up 18% year-over-year.
“The computer industry is going through two simultaneous transitions — accelerated computing and generative AI,” said NVIDIA CEO Jensen Huang in a statement accompanying the results.
Wood said other companies with visionary leaders, strong global distribution and, perhaps most important, large high-quality pools of proprietary data should be big AI winners, with revenues and earnings surprising significantly on the high side of expectations during the years ahead.
At six times revenues, she said electric automaker Tesla (NASDAQ:TSLA) is the most obvious beneficiary of recent breakthroughs in AI as it aims for an $8-10 trillion revenue total addressable market (TAM) in autonomous mobility by 2030.
“But, based on our research for the last five to six years, @ARKInvest sees dozens of AI winners!”, Wood concluded.