During 2023 - the stocks that led the markets and the recovery were 'The Magnificent Seven'. Their share values took off, while many other shares languished until around the start of November 2023.
The Magnificent Seven are Apple, Alphabet (Google), Amazon, Meta (Facebook), Microsoft, Nvidia and Tesla. You are most likely familiar with the products of the six consumer brands, but who is Nvidia and why is it important?
A number of your fund managers are invested in Nvidia and the diagram above shows the share performance over the last year to April, as AI became a commercial reality.
Nvidia is an American multinational technology company that invents the graphic processing unit (GPU) and drives advances in AI, gaming, creative design, autonomous vehicles and robotics. According to Alphinity, Nvidia produces GPU's for $1 trillion of infrastructure that regularly need to be replaced and it controls 80 - 90% of the 'accelerator' market.
The competition is currently unable to keep up with Nvidia, who already have the next generation of products on the horizon.
Pathfinder tell us that Nvidia's original focus was to excel at designing and building a type of computing processing unit superior at processing large problems quickly. But the technology has been recognised as the most energy efficient.
Nvidia has carved out a market-leading position as the choice for large cloud infrastructure customers, which make AI tools a reality. Gross Profit margins have also expanded into the 70+% region, generating significant free cash flow.
No wonder they have been a 'darling' of investors worldwide.
