In just a few years, Nvidia (NASDAQ: NVDA) has skyrocketed to become one of the world’s largest companies, boasting a market cap exceeding $3 trillion. Nvidia is not the only one on this upward trajectory, though. Numerous AI stocks are experiencing explosive growth as well. But is Nvidia stock still a worthwhile investment? Recent research by The Motley Fool on AI adoption rates strongly suggests so, with surprising statistics to support this assertion.
The AI revolution is only in its nascent stages, offering substantial opportunities for early investors who exhibit patience. Despite the current low adoption rate of AI in U.S. businesses standing at just 6.8%, projections indicate a significant increase to 9.3% within the next six months, representing a 37% surge. Nonetheless, even with this anticipated growth, overall adoption of AI will remain below 10%. This suggests that despite the hype surrounding AI, its actual adoption rates are still relatively modest. Nevertheless, rapid growth is expected in the coming years, potentially transforming the landscape of various industries.
Supporting these findings, global consultancy McKinsey forecasts a staggering expansion of the AI market by 2040. Conservatively, AI software and services revenue could surge from $85 billion in 2022 to $1.5 trillion in 2040, while optimistically, this figure could soar to $4.6 trillion. For generative AI alone, McKinsey anticipates economic growth ranging from $2.6 trillion to $4.4 trillion due to increased adoption by businesses.
This unfolding scenario presents a rare growth opportunity in history. However, does this make investing in a company like Nvidia a wise choice at present? Evaluating a growth market differs from investing in one, as stocks with high growth potential often come with elevated valuations. While Nvidia’s revenue is on a significant growth trajectory, its price-to-sales multiple (P/S) stands notably high at 21.6 for a multi-trillion-dollar company. Despite this, given the promising outlook for continued growth in the AI sector according to the aforementioned statistics, it is reasonable to expect Nvidia to sustain its growth momentum for years to come.
Investing in growth stocks like Nvidia can be tumultuous in the short term, as evidenced by the market cap fluctuations earlier this year. Despite this, investors looking to leverage the rising tide of AI adoption rates should focus on the long-term potential of Nvidia and not be deterred by short-term market volatility. With Nvidia’s established dominance in AI graphic processing units, driven by strategic decisions and early investments, the company is poised to capitalize on the burgeoning opportunities presented by the AI revolution.
By focusing on both the software and hardware aspects of the supply chain, the company has the potential to tap into a rapidly expanding market for years to come. Premium valuations may appear undervalued over extended periods. Nvidia remains a strong choice for investors seeking to capitalize on the AI revolution, with patience likely leading to significant profits. Don’t overlook this second opportunity for potential gains.
Have you ever felt like you missed out on investing in top-performing stocks? Then you won’t want to miss this. Occasionally, our team of analysts issues a “Double Down” recommendation for companies they believe are poised for success. If you fear you’ve already missed the boat, now might be the perfect time to invest before it’s too late. Consider these impressive returns:
– Nvidia: A $1,000 investment in our Double Down pick in 2009 would now be worth $292,207!
– Apple: A $1,000 investment in our Double Down pick in 2008 would now be worth $45,326!
– Netflix: A $1,000 investment in our Double Down pick in 2004 would now be worth $480,568!
Currently, we are issuing “Double Down” alerts for three exceptional companies, and another opportunity like this may not arise soon.
(*Stock Advisor returns as of March 3, 2025. Ryan Vanzo has no position in any mentioned stocks. The Motley Fool holds positions in and recommends Nvidia and has a disclosure policy.)
