NVIDIA is at the top of its game

Risk/Reward Rating: Negative

NVIDIA pioneered GPU (graphics processing unit) accelerated computing and it is paying dividends. The driver of the GPU advantage is that CPUs (central processing units) are no longer keeping up with computing power demand as Moore’s law has ended (Moore’s law states that the number of transistors in a dense integrated circuit doubles about every two years).

The company has demonstrated foresight by transforming itself into a computing platform company from a pure chip vendor. This platform approach has positioned NVIDIA to capture higher value business across their customers’ technology stack, such a software. The higher value business garners a higher valuation versus commoditized semiconductor suppliers.

NVIDIA’s valuation is extraordinary and fully reflects its leadership position.