Nvidia (NASDAQ: NVDA) could make the same statement attributed to Julius Caesar: “Veni, vidi, vici.” The phrase translates into “I came, I saw, I conquered.” The chipmaker has conquered quite a bit since its founding in 1993.
For years, Nvidia made most of its money in the gaming market. More recently, however, the company’s growth has come largely from the deployment of its GPUs in data centers. What’s the next frontier for Nvidia? Here’s the $4.7 trillion market the chipmaker has its eyes on now.
Big moves in a big market
The U.S. spent an estimated $4.7 trillion on healthcare last year. That amounts to roughly 18% of the country’s total economic output. Nvidia has recently made several major moves in this big market.
To be sure, healthcare isn’t a brand-new focus for Nvidia. The company’s technology has been used in healthcare before. For example, Nvidia launched its Clara AI platform for medical imaging in 2018. However, the company appears to have shifted its healthcare efforts into a higher gear.
Nvidia has announced multiple new healthcare collaborations and services over the last few weeks. On March 18, the company introduced a new suite of 25 “microservices” for healthcare organizations. This platform enables customers to integrate generative AI into existing applications.
At its 2024 GTC AI Conference in March, Nvidia announced two major milestones with healthcare giants Johnson & Johnson and GE Healthcare. It’s working with Johnson & Johnson to use AI in surgical operations. GE Healthcare used Nvidia’s technology to develop a model for analyzing ultrasound images.
How AI (and Nvidia) could transform healthcare
It’s not an exaggeration to say that AI holds the potential to transform healthcare. How? Let’s start with diagnosing diseases. AI has already shown tremendous promise in analyzing medical images, as GE Healthcare is doing with Nvidia’s TensorRT software. The technology can help rapidly analyze test results, create personalized medical risk assessments for patients, and provide decision support for physicians.
Some biopharmaceutical companies use AI in their drug development process. In particular, AI can predict protein structures and analyze genetic sequences. Nvidia isn’t just helping biotech companies on this front; it also invested $50 million in Recursion Pharmaceuticals, which uses AI for drug discovery.
AI can make medical technology devices more effective. That’s what J&J hopes to do by using Nvidia’s IGX edge computing platform and Holoscan edge AI platform to help develop new surgical devices.
One of the biggest complaints that U.S. healthcare professionals have is the amount of administrative work they must do. AI holds the potential to streamline a wide range of administrative tasks, including appointment scheduling, claims processing, and clinical documentation. This hasn’t been a major area of focus for Nvidia so far, but it could present a big opportunity for the company.
Should you buy Nvidia stock because of its healthcare efforts?
Nvidia’s ongoing expansion into the lucrative healthcare market could achieve tremendous success. However, I don’t think these healthcare efforts by themselves justify buying the stock right now.
But what about the combination of Nvidia’s healthcare initiatives and everything else the company is doing? Its overall growth prospects remain highly attractive. My chief concern with Nvidia is that its stock has such lofty expectations baked in that any hint of less-than-spectacular results could cause shares to fall hard.
Still, I think any pullback would present a great buying opportunity for this high-flying stock. And that’s my view regardless of whether Nvidia conquers the healthcare market.
Should you invest $1,000 in Nvidia right now?
Before you buy stock in Nvidia, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Nvidia wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $539,230!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.
*Stock Advisor returns as of April 4, 2024
Keith Speights has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool recommends Johnson & Johnson. The Motley Fool has a disclosure policy.
Here’s the $4.7 Trillion Market Nvidia Has Its Eyes on Now was originally published by The Motley Fool
Source link
