A Wealth of Common Sense: Looking for the Next NVDA
Investors have enjoyed a strong stock market over the past two years. The market rally started right around the time of the launch of ChatGPT in late 2022. And investments in AI turned around the bear market and brought back optimism for investors.
No company has been a better sign of that trend than Nvidia (NVDA). The graphics processing unit (GPU) manufacturer has had a long life. It’s shifted from niche gaming, to demand for cryptocurrency mining, and now AI tools.
While Nvidia can likely continue trending higher, the big returns have been made. Investors would be wise to look for the next Nvidia. That’s especially true as Nvidia’s shares have started to slow down their returns in the second half of 2024.
What should investors look for? A company with a relatively small market cap for starters. That can lead to faster growth. It’s easier to go from $10 billion to $100 billion than for Nvidia to add another $1 trillion.
Smaller companies can be more volatile and unproven. But that was the case with Nvidia when it first started to get compared to Intel (INTC).
Intel has been a poor performer as it’s been unable to successfully pivot to AI-related chips.
Finally, investors should look for American-based companies. The U.S. has the most developed technology, legal, and financial networks. Plus, geopolitical considerations remain a concern, making the U.S. ideal for tech investors today.