Nvidia (NASDAQ: NVDA) seemed to save the market this week.
The chip-maker set the bar even higher Wednesday when the company reported the highly anticipated earnings. Shares dropped ahead of the release, only to surge over 12% as the company came out with earnings after hours.
What happened?
The company beat out top-line expectations by almost US$2 billion, with management stating there was even more long-term growth to come. Revenue came in at US$22.1 billion for the fourth quarter, up from US$6.05 billion the year before. Analysts expected revenue at US$20.4 billion.
Its data centre revenue also soared 400%, hitting US$18.4 billion, about a billion higher than the US$17.06 billion target. And what’s more, Nvidia stock is looking like it will see continued strong growth for the next few quarters as well. The company believes it will achieve US$24 billion in revenue at the midpoint, and chief executive officer Jensen Huang stated in a call they’re “just getting started.”
True, but it cannot be denied that Nvidia stock now looks far overvalued. Artificial intelligence (AI) infrastructure will certainly be necessary to build over the next few years — even the next decade! However, there has been a frenzied purchase of the stock. What’s more, supply-chain disruptions could cause the company to see a major fall in share price, which was seen in the past.
Another area of growth
While AI is certainly here to stay, and chip stocks are all the rage, there are other areas of the market that investors will want to consider — not just for diversification but for huge long-term growth. Nvidia stock, at this point, looks far too risky in my view to jump in. Instead, I would want to grab hold of the more secure area of renewable energy.
Renewable energy stocks climbed in the last few years, dropping back under pressure from inflation and interest rates. Yet, as cuts come, this area will likely see a resurgence in interest — not just from investors but from governments as well.
In fact, if you want to invest in the next oil, invest in the next power area! That would certainly be renewable energy. Global investment in renewable energy hit a record high already in 2021, hitting US$1.3 trillion. It’s also proven a more cost-effective strategy, with solar power in particular providing cheap and effective power. So, if you’re looking to invest, where should you go?
Innergex
Instead of the growth already seen by Nvidia stock, consider the potential and continued growth of Innergex Renewable Energy (TSX: INE). The company has a strong track record dating back to 1990, with consistent and predictable cash flow from its assets.
What’s more, the company continues to focus on growth, with several projects currently underway. This allows for even more long-term growth for today’s investors. In fact, recent earnings proved that the company has even more room to run.
During its fourth-quarter results, Innergex stock announced earnings per share that beat out estimates by a whopping 65%! This sent shares surging about 11.5%, and be brought down to the company continuing its growth strategy. This has increased its portfolio diversification. Furthermore, it now sees full-year guidance for 2024, hitting $725 to $775 million in adjusted earnings before interest, taxes, depreciation and amortization. That would be even higher than the $735.3 million hit this year, which was up 12% from 2022 levels.
Bottom line
Nvidia stock is proving its worth these days, it’s true. The company believes there is also room to grow. But value is already in the stock in this case. Instead, I would consider Innergex stock. The company has made a huge comeback with investors very excited about the future. And with shares still down 50% in the last year, there is a lot of growth to be had.
