Why Nvidia stock exploded on Tuesday

Actions of Nvidia (NASDAQ:NVDA) jumped higher Tuesday, jumping as much as 6.3%. As of 1:59 p.m. ET, the stock was still up 5.8%, bringing it back above that psychologically important level. Market capitalization of $3 trillion.

The catalyst that sent the chipmaker and artificial intelligence (AI) The specialist learned above that the company is entering an important new market, which could boost its future sales.

A vast new market

Nvidia’s graphics processing units (GPUs) have become the benchmark and a key part of the rise of generative AI. These processors provide the computing power needed to accelerate the AI ​​training and inference process, which primarily occurs in data centers.

The company has signed a deal to bring its AI expertise to telecommunications company Ooredoo of the Middle Eastern country of Qatar. The deal will provide its customers in Qatar, Algeria, Tunisia, Oman, Kuwait and the Maldives with “direct access” to Nvidia’s AI technology, according to a Reuters report.

The US government has limited the technology Nvidia can export to Middle Eastern countries in order to prevent China from accessing its most sophisticated technology. The report suggests that Nvidia would comply with government mandates while playing a significant role in supplying AI chips to the region.

The expansion of AI continues

This news follows Nvidia’s latest blockbuster financial report, which continues its triple-digit revenue and profit growth. This, in turn, has fueled its stock price rise and recent 10-for-1 stock split.

Some investors have expressed concern that the next stage of Nvidia’s growth is slowing and wonder how much further AI has left. Most experts agree, however, that AI adoption is still in its infancy. Generative AI will become a $1.3 trillion market by 2032, according to estimates provided by Bloomberg Intelligence.

Furthermore, at approximately 35 times forward earnings, Nvidia stock remains reasonably priced, particularly in light of the continued opportunity presented by AI.

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Danny Vena has positions at Nvidia. The Motley Fool Ranks and Recommends Nvidia. The Motley Fool has a disclosure policy.

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