Jensen Huang Just Predicted This AI Category Would Reach $1 Trillion. Is Nvidia Stock a Buy?

Core Insights - Nvidia has emerged as a leading AI stock, with significant attention on its annual GTC conference where CEO Jensen Huang shares key developments [1][3] - The company is in full production of its Blackwell platform and has plans for future platforms, Rubin and Feynman, indicating ongoing innovation [2] - Despite trading at a discount due to macroeconomic concerns, Huang's forecast of $1 trillion in data center capital expenditures by 2028 is expected to reassure investors [3][5] Data Center Growth - Nvidia's CEO presented a forecast showing data center capital expenditures expected to grow from approximately$250 billion in 2023 to $1 trillion by 2028 [4][5] - The majority of Nvidia's revenue is derived from data centers, with 91% of its revenue coming from this segment in the fourth quarter, highlighting its importance to the company's future [6][7] - If global data center capital expenditures double between 2025 and 2028, Nvidia's data center revenue is projected to double or grow even faster due to new products [7] Market Position and Valuation - Following a strong fourth-quarter earnings report with 78% revenue growth, Nvidia's stock experienced a sell-off, reflecting waning investor enthusiasm [8][9] - Currently, Nvidia trades at a price-to-earnings ratio of 39 and a forward P/E of less than 26, with analysts forecasting 50% growth in earnings per share this year, suggesting it is undervalued compared to the S&P 500 [10] - The pessimism surrounding Nvidia's stock may be overdone, as it only needs to outgrow the S&P 500 to be considered a winner, given its ongoing revenue growth and technological advancements [11] Long-term Outlook - Investors may overlook current concerns about trade wars and consumer spending, focusing instead on the long-term growth potential driven by data center spending [12]