Nvidia flies on the wings of the AI boom
Nvidia was founded in 1993 to solve the problem of 3D graphics in computers. The share price stagnated at less than ten dollars until 2016, but especially during the last five years it has experienced an explosive rise of almost 2000 percent.
Nvidia (USD per share), five-year chart
Nvidia is currently measured by market value as the fourth largest company in the world with a value of about two trillion dollars.
Nvidia graphics processors, i.e. GPUs, have long been popular with those who play computer games that require power, 75 percent of all gamers prefer Nvidia graphics cards.
Nvidia makes its profits from GPU units, computer software and cloud services designed to support booming artificial intelligence (AI) applications.
Last year, ChatGPT and many other AI applications caused a stir. They need thousands of GPU units for learning and different reports according to Nvidia's market share in machine learning can be up to 95 percent.
Last week Nvidia, which benefited the most from the Nvidia AI boom, published its interim report. The company exceeded Wall Street's expectations in both sales and earnings, and in addition to this, the company said that the turnover was higher than expected, even against the expectations predicting skyrocketing growth.
The company's earnings per share (EPS) was $5.16 per share, while expectations were $4.64. Revenue was expected to have been $20.62 billion in the last quarter of last year, but Nvidia achieved a whopping $22.10 billion in revenue for the quarter.
The company's turnover increased by 265 percent from last year's Q4 turnover.
According to the company, the strong demand was fueled by business software and Internet applications designed for consumers, as well as several industries, such as the automotive industry, financial services and healthcare.
Many analysts who follow tech stocks believe that AI-fueled stocks are overpriced and believe a correction is ahead, at least until the real-world benefits of AI emerge and its impact can be seriously seen in companies' results.
Vontobel, which launches leveraged products on the Finnish market, offers products for the pursuit of profit in both the rising and falling rates of Nvidia.
A trader can speculate on Nvidia's rising price, for example Vontobel TLNG NVDA V266 with a turbo. The leverage of the product is 10.24 times and the risk buffer is 8.85 percent at the time of writing. If Nvidia's price increases by one percent, the value of the turbo will increase by 10.24 percent. If the share price falls against expectations by one percent, the turbo produces a loss of 10.24 percent.
With the TSRT NVDA V332 turbo, the trader can aim for a return on Nvidia's falling price. The product's risk buffer is approximately 20.86 percent and the leverage is 4.63 times at the time of writing. If Nvidia's stock rises by one percent, the turbo produces a 4.63 percent loss, but if the stock price falls by one percent, the turbo produces a 4.63 percent profit.
Risks
Investors in the products are exposed to the risk that the Issuer or the Guarantor may not be able to meet its obligations under the products. A total loss of the invested capital is possible. The products are not subject to any deposit protection.
The value of the products can fall significantly below the purchase price due to changes in market factors, especially if the value of the underlying asset falls. The products are not capital-protected
Due to the leverage effect, there is an increased risk of loss (risk of total loss) with leverage products, e.g. Bull & Bear Certificates, Warrants and Mini Futures.
Product and possible financing costs reduce the value of the products.
If the product currency differs from the currency of the underlying asset, the value of a product will also depend on the exchange rate between the respective currencies. As a result, the value of a product can fluctuate significantly.