Nvidia Shares May Still Be a Buy Despite AI Spending Concerns
Nvidia's shares may still be a buy ahead of its upcoming earnings update, according to recent financial results from CoreWeave.
The AI-focused cloud computing company's strong second-quarter results show sustained demand for Nvidia's products and indicate that the AI tailwind hasn't peaked yet.
Nvidia's lead in the GPU market remains impregnable due to its CUDA ecosystem, which provides a wide moat from switching costs. The company is also tapping into new opportunities, estimating a $200 billion addressable market in the CPU industry driven by the rise of agentic AI systems that run on CPUs.
Nvidia's shares are trading at 24.8x forward earnings, versus an average of 21.1x for information technology stocks, which seems more than fair considering sustained demand and growth prospects.