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Click here to read this on StonyFinLab.org
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Featured Student Column: Equity Research Report
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Analyst: Christopher Chan
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Research Assistant: Samuel Zou
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Nvidia is a leading technology company specializing in GPUs and AI hardware, commanding about 88% of the GPU market and driving innovation in fields like autonomous driving and robotics. The company has experienced exponential growth, particularly in its Compute and Networking segment, fueled by rising demand for AI and data center technologies, with its EBITDA showing remarkable increases. Despite challenges such as geopolitical risks, supply chain vulnerabilities, and competition, Nvidia remains well-positioned to sustain its dominance through strategic investments in cutting-edge technology and emerging markets.
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Nvidia has continued its remarkable growth in 2024, reporting $26 billion in revenue and $15 billion in net income for its fiscal Q1, largely driven by a 427% year-over-year surge in its data center segment. This sector, which supports the booming AI industry, accounted for 87% of the company’s $22.6 billion revenue between February and April. Nvidia’s success has been fueled by rising demand for AI-focused chips, particularly after OpenAI's GPT-4 launch in March 2023. While its gaming and visualization segments also saw growth, Nvidia’s dominance in the AI market has widened the gap with competitors like AMD, which generated $5.5 billion in revenue over the same period.
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Nvidia's Jensen Huang and Meta's Mark Zuckerberg doubt quantum computing's near-term potential, impacting related stocks. Meanwhile, Alphabet shines with its Google Quantum AI breakthroughs, including the Willow chip, and a strong portfolio in AI, cloud, and platforms like YouTube, solidifying its investment appeal.
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Consumer prices rose 2.9% in December, up from 2.7% in November, signaling rising inflation just before Donald Trump takes office. Core inflation increased by 3.2%, while egg prices surged 36% due to avian flu. The Federal Reserve may delay further rate cuts to manage inflation, which could worsen with Trump’s proposed import tariffs.
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Bitcoin (BTC-USD) recently dropped to its lowest point since November, hitting $91,600 after reaching record highs of over $108,000 in early December. This drop comes as the crypto rally slows down ahead of President-elect Donald Trump’s inauguration, with inflation concerns causing investors to pull $580 million from Bitcoin ETFs. Trump is seen as pro-crypto, planning to appoint Paul Atkins to lead the SEC and create a "crypto czar" position for former PayPal CEO David Sacks. While many are hopeful about these changes, investor Anthony Scaramucci reminds everyone that change in Washington takes time. At the same time, crypto-related stocks like MicroStrategy and Coinbase have fallen by 12.7% and 9.6%, showing how closely tied they are to Bitcoin’s performance. Enthusiasts remain optimistic, but there’s still concern about potential volatility in the market.
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