Nvidia Has Tumbled From All-Time Highs in October. Here's What's Next.
Key Points
Nvidia was the first $5 trillion stock, but it's declined over the past few weeks.
The chipmaker has an edge in its vertically integrated ecosystem of products.
However, it's facing new competition from the likes of Amazon and Alphabet.
- 10 stocks we like better than Nvidia ›
Nvidia (NASDAQ: NVDA) made stock market history, again, when it reached a $5 trillion market value at the end of October. However, it has since fallen almost 10% from those highs and currently sports a $4.4 trillion value. What's next for the artificial intelligence (AI) giant?
Image source: Nvidia.
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Competition and new products
One way Nvidia has stayed on top of the AI mountain is by constantly upping its game and releasing new, groundbreaking products. It's best known for its expensive and powerful graphics processing units (GPUs), but it's increasingly focused on vertically integrated products that draw high-paying clients into its ecosystem.
These companies are spending vast amounts of money on their AI development using Nvidia products, creating high barriers to entry for other vendors. That gives Nvidia an edge on top of the one it already has from having the most powerful program.
However, there are other top companies, including Amazon and Alphabet, that are creating their own AI chips and finding the white space to drive AI.
What seems likely is that Nvidia will keep launching new and improved technology and keep its lead, but as competition heats up, the landscape continues to change, and the company gets bigger, growth will decelerate. The price is already coming down to a more realistic valuation, and it could still beat the market next year, but it isn't likely to deliver the life-changing gains it has in the past.
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