What's Going On With Nvidia Stock Tuesday

Nvidia Corp NVDA continues to bask in the success of the artificial intelligence boom.

Snowflake Inc SNOW tapped Nvidia to aid businesses in creating customized generative AI applications using their proprietary data in the Snowflake Data Cloud.

A separate report suggests strong demand in China for advanced chips used on AI projects creates a growing market for smuggled Nvidia GPUs, despite the U.S. ban.

Sourcing smuggled GPUs has become a big moneymaking enterprise due to the robust domestic demand for Nvidia's A100 and H100 GPUs, SCMP cites semiconductor engineers and vendors.

Interestingly, Tesla Inc's TSLA first supercomputer will likely enter production in July and cut reliance on Nvidia.

Tesla's self-developed AI training and inference chips may reduce its dependence on traditional chip makers, Digitimes reports.

Aswath Damodaran, Professor of Finance at the Stern School of Business at NYU, acknowledged how AI drives the market upward, and more so for the stocks in its orbit.

Nvidia has been opportunistic and found high profits by getting ahead in niche markets - gaming and crypto in the previous decade and AI in this one.

The company's niche is high-powered GPU, and it has invested heavily in R&D to get that niche. 

His Nvidia story reflects a dominant market share of a growing AI market and a sizable market share of the Auto chip market. The change will increase profit margins already well over the industry average. Nvidia outsources chip production to Taiwan Semiconductor Manufacturing Company Ltd TSM and uses pricing power and reinvestment in line with the industry average.

Even with that upbeat story, with revenues growing ten-fold and operating margins approaching 40%, he gets a value per share of about $240, well below the price of $410 (on June 12, 2023).

The stock has surged to a staggering 185% YTD.

Price Action: NVDA shares traded higher by 2.15% at $415.08 on the last check Tuesday.

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