Where Will Nvidia Stock Be in 1 Year?

Long-term is usually the key to sustainable stock market returns

But a company's short-term risks and opportunities can reveal early clues on how the whole story will play out

The company maintains its economic moat with a combination of constant innovation, support software, and a developer community that is accustomed to using its ducts

That said, when you are already at the top, there is only one way to go: down

That isn't to say Nvidia's is crashing, because it isn't

However, this may be the start of a longer-term trend, a little closer to

These immense mark-ups create an incentive for Nvidia's biggest clients (many of which are nology leaders in their own right) to replace its ducts wherever possible

OpenAI has been particularly aggressive in its efforts to diversify its supply chain

In February, OpenAI began finalizing designs with Taiwan Semiconductor Manufacturing to fabricate its first custom AI chip to help run and train its AI workloads without relying on Nvidia hardware

Custom chips are a particular threat to Nvidia's model because they can be more cost-effective for specialized use cases compared to Nvidia's one-size-fits-all solutions

Other major clients Alphabet and Amazon already make in-house chips, which are offered for client workloads alongside Nvidia hardware through their respective cloud computing platforms, Google Cloud and AWS

Image source: Getty Images

What will the next year have in store

While Nvidia has a great deal of near-term challenges, it also has opportunities

One of the biggest of these may be a concept called sovereign AI, which involves helping countries control their own AI data, hardware, and infrastructure without over-relying on foreign companies (mainly in the U

For many countries, this is important because their unique linguistic, cultural, and political situations may not be well served by large language models developed elsewhere

So far, Nvidia has received a warm reception while pioneering this idea in Europe, where it is helping France, Italy, and the U

Deploy thousands of Blackwell systems with the help of local partners

Nvidia is also making gress in the Middle East, where it is working with a Saudi partner, HUMAIN, to build what it calls AI factories using its hardware

That said, this story is just getting started

And it is un if the soverign AI concept will fully catch on

Investors should bably wait for more information before considering a position in the stock

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors

Will Ebiefung has no position in any of the stocks mentioned

The Motley Fool has positions in and recommends Alphabet, Amazon, Nvidia, and Taiwan Semiconductor Manufacturing

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