Do you think it's too late to buy Nvidia? Here is the most important reason why there is still time.

For investors who don't own, this is self-evident Nvidia (NASDAQ:NVDA) think they missed something. After all, the share price has risen by 243% in the last year alone and by 543% in the last three years. But instead of looking back, let's look forward and see if there is more room for maneuver.

Nvidia is not just an artificial intelligence (AI) company. The company has four operating segments, each of which delivered sequential quarterly revenue growth as well as year-over-year increases in the most recent quarterly period. The data center segment, which meets the growing need for advanced AI computer chips, is the fastest growing, and there could be many more to come.

Prediction: Another $1 trillion investment is imminent

Back in February, Nvidia CEO Jensen Huang made this prediction: “There is an installed base of data centers worth about a trillion dollars. Over the next four or five years, we will have $2 trillion worth of data centers powering software around the world.”

Nvidia already has a market capitalization of around $3.4 trillion. But if he's right, that's significant additional revenue for the undisputed AI market leader. And there are increasing signs that Huang's prediction is coming true.

Microsoft recently gave investors an idea of ​​how much data center spending has exploded. In its most recent 10-K annual report, filed for fiscal year 2024 (ending in June), Microsoft noted that it had $108.4 billion in data center capital lease obligations over the next five years will begin. That's almost $100 billion more than two years ago, and the term of these leases is up to 20 years.

Not many investors foresaw the explosive growth of AI data centers. However, there still appears to be a lot of growth in this segment, and that's a good reason to buy Nvidia stock now. And don't forget the other business areas, like automotive and robotics, that could follow as progress is made in self-driving cars and companies pursue more automation.

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The story continues

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*Stock Advisor returns as of October 21, 2024

Howard Smith has held positions at Microsoft and Nvidia. The Motley Fool has positions in and recommends Microsoft and Nvidia. The Motley Fool recommends the following options: long $395 January 2026 calls on Microsoft and short $405 January 2026 calls on Microsoft. The Motley Fool has a disclosure policy.

Do you think it's too late to buy Nvidia? Here is the most important reason why there is still time. was originally published by The Motley Fool