The Smartest AI Stock to Buy on Anthropic's IPO Filing Isn't Anthropic
Key PointsNvidia will cash in on the massive AI build-out.
Anthropic has submitted its S-1 filing with the Securities and Exchange Commission (SEC), which indicates its intent to go public in the future. The filing reveals several aspects of Anthropic's future plans, but one underlying theme is particularly noteworthy: Nvidia's essential role in Anthropic's AI infrastructure.
Nvidia (NVDA -0.80%) has been the dominant player in AI investments since 2023, but its recent performance has been less impressive. Despite this, the recent unveiling of Anthropic's S-1 filing provides further evidence that Nvidia remains a wise investment choice, and now could be an opportune moment to purchase the stock.
Anthropic's partnerships with major industry players, including Nvidia, are evident in their use of various chips to train and operate AI models. As a result, Nvidia's graphics processing units (GPUs) are also extensively utilized in cloud computing environments, where companies hosting internal AI models or creating products with Anthropic's Claude AI at their core will incur additional cloud computing costs.
Furthermore, Anthropic has expressed confidence in the longevity of their AI investments, citing timeframes of five to ten years. This indicates that, in Anthropic's perspective, the AI build-out is far from completion. Furthermore, Nvidia anticipates that global AI data center capital expenditures will increase to $3 trillion to $4 trillion annually by 2030, with Anthropic playing a significant role in this growth.
Despite this promising outlook, the market has not fully recognized Nvidia's potential for growth. Nvidia has set ambitious revenue growth targets for 2027, with an expected 70% increase. However, the market has not incorporated even a single penny of growth into its stock price beyond 2026. Currently, Nvidia trades at approximately 23 times this year's earnings estimates, dropping to a more attractive 13.6 times earnings if using next year's estimates.
This discrepancy between Nvidia's growth potential and market valuation presents a unique opportunity for investors. With strong guidance for continued growth and a substantial role in AI infrastructure, Nvidia is an undervalued AI stock to consider for investment, particularly given its current trading price.
Written by urgent.news from Motley Fool's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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