Nvidia Passes $500 For First Time Ever — Analysts Think It Can ...

24 Aug 2023

Forbes

Topline

Nvidia shattered its prior all-time high share price Thursday after a blockbuster earnings report again propelled the artificial intelligence leader’s stock – and some analysts think the company has much more room to grow.

Nvidia is still Wall Street's darling.

Getty Images Key Facts

After Nvidia reported quarterly sales and profits which beat analyst projections by more than 20% apiece, its shares jumped about 7% to $502 shortly after open, set to shatter its prior intraday record of $482 set Monday.

Nvidia’s results “delivered” despite being “one of the most anticipated earnings results we have ever seen,” Bernstein analyst Stacy Rasgon wrote in a Thursday note to clients, declaring the stock the “best” way on the market right now to play the AI craze.

Wall Street consensus is that the stock has much more room to grow even after its nearly 350% rally since last fall: The median price target for Nvidia after its Wednesday earnings report is $620, according to 29 analysts tracked by FactSet, implying 24% upside.

A $620 share price would send Nvidia’s market capitalization to $1.5 trillion, above $1.4 trillion Amazon.

Some have even bigger aspirations: Rosenblatt analyst Hans Mosesmann upped his price target for the company from $800 to $1,100, pricing Nvidia’s fair valuation at $2.7 trillion, which would make it the second-most valuable company in the world, just behind Apple’s $2.8 trillion market cap.

Crucial Quote

“Nvidia’s epic print and guide two quarters in a row is simply unprecedented and just getting started,” Mosesmann gushed, referring to the similarly blowout earnings report Nvidia delivered in May, inspiring a 24% stock surge in the first trading session that followed.

Key Background

The leading producer of the chip technology powering generative AI, Nvidia has enjoyed a nearly $1 trillion bump to its valuation since last fall as bullishness about AI drives markets higher, even amid a shaky macroeconomic backdrop. Nvidia’s 250% jump this year easily outpace the S&P 500’s 16% gain and the tech-heavy Nasdaq’s 33% rally. Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla, the seven most valuable U.S. companies, have driven a majority of market gains this year.

Tangent

Nvidia’s rapid rise on the back of rising sentiments and exploding value metrics has elicited comparisons to Tesla’s more than 1,000% surge in 2020 and 2021 and how its eruption impacted broader markets. “Now, as then, investors in aggregate are very enthusiastic about growth stocks—notably, technology shares—and seem to have limited interest in value stocks, including financial, industrial, and health care companies,” according to Vanguard analyst Kevin DiCiurcio.

Cheif Critic

Few were bold enough to speak out against Nvidia following its home-run earnings, but New Constructs CEO David Trainer declared the company’s valuation is “beyond lofty and unjustifiable” in emailed comments. “Nvidia's ridiculous valuation achieved over such a very short period of time reminds us that 'fear of missing out' is alive and well and that is a very dangerous phenomenon for investors that never ends well,” Trainer continued.