By Edith Muthoni

The trailblazing semiconductor company renowned for its graphics processing units (GPUs), Nvidia has recently marked a significant milestone in its fiscal journey.  According to Stocklytics.com, Nvidia propelled its research and development (R&D) expenditure to an impressive 73 per cent in 5 years. The chipmaker spent US$8.68 billion on research and development (R&D), showcasing a substantial surge from the US$2.38 billion allocated in 2019. 

Stocklytics Financial analyst Edith Reads commented on the data:

The trajectory of Nvidia’s R&D investment illuminates a strategic maneuver aimed at fortifying its position at the forefront of technological advancement.

Stocklytics Financial analyst Edith Reads                                                    

Under the astute leadership of CEO Jensen Huang, Nvidia has transcended its gaming origins to emerge as a pivotal player in artificial intelligence (AI). Over the past decade, Huang’s visionary guidance has propelled Nvidia beyond traditional gaming applications into AI, where its data centre products play a pivotal role in facilitating generative AI capabilities.

A cornerstone of Nvidia’s foray into AI lies in its provision of cutting-edge technologies that underpin the training and operation of large-scale language models. Furthermore, a prominent example of Nvidia’s technological prowess in action can be observed in the deployment of ChatGPT, a sophisticated language model powered by Nvidia’s hardware infrastructure. Such applications underscore Nvidia’s pivotal role in shaping the landscape of AI-driven innovations.

Nvidia’s 80% Market Share

Presently, Nvidia controls over 80 per cent of the AI chip market, so the company has a clear advantage. However, rivals are doing what they can to chip away at Nvidia’s lead.

For instance, AMD released a new high-performance chip late last year, and though it’s slower than Nvidia’s top product, it may win over some cost-conscious customers. Additionally, AWS aims to target customers on a budget by offering chips for training language models and inference. These are just two examples.

Despite these challenges, Nvidia has been pouring resources into its R&D expenditure to keep innovating its chips and maintaining its lead in the market. That gives the company pricing power, and it should ensure its AI chip dominance over the long term.

These efforts and an excellent earnings track record make Nvidia an incredible growth stock to buy today.