Nvidia (NVDA) was out to remind investors that it is more than just a hardware company that manufactures chips. Indeed, earlier today, it showcased its growing range of AI software platforms at its AI Summit in Washington, D.C. Nvidia’s software, like NIM Agent Blueprints and NeMo, is being used by companies such as AT&T (T) and research centers like the National Cancer Institute to build custom AI models and chatbots, as well as assist with tasks like drug development and analyzing space radio waves.
These tools are helping Nvidia move into new revenue streams beyond hardware sales. In fact, software complements the company’s hardware segment perfectly, as it adds recurring revenue opportunities. It also helps Nvidia separate itself from its competitors, who are undoubtedly working hard to develop products that match Nvidia’s capabilities and who could ultimately undercut its prices.
By focusing on its software ecosystem, the company is looking to hold on to customers for the long term, similar to how Apple (AAPL) has done with its services. And as Nvidia’s network continues to grow, it will attract more developers who will help Nvidia maintain its leadership in the AI market. All of this enthused investors today, as they pushed the stock up over 3% at the time of writing.
AI Software Market Expected to Grow Significantly
Adding a software component to a company that mainly sells hardware products is a solid catalyst by itself. However, given that Nvidia is targeting the AI software market, then the growth potential seems all the more interesting. That is because the artificial intelligence market is expected to grow at an annual rate of 36.6% from 2024 to 2030 and ultimately reach a total value of $1.8 trillion, according to Grand View Research.
With growth prospects like this, it is no wonder why 21% of all portfolios tracked by TipRanks hold shares of NVDA with an average portfolio weighting of 13.3%. However, it is worth mentioning that sentiment has recently turned negative, as 0.9% of these investors have reduced their holdings.
Is NVDA Stock a Buy?
Turning to Wall Street, analysts have a Strong Buy consensus rating on NVDA stock based on 39 Buys, three Holds, and zero Sells assigned in the past three months, as indicated by the graphic below. After a 192% rally in its share price over the past year, the average NVDA price target of $152.44 per share implies nearly 15% upside potential.
