Nvidia (NASDAQ:NVDA) stands out as a frontrunner among tech stocks, blazing a trail of significant wealth generation for its investors. With an impressive surge of 241.5% in the past year and a staggering 15,738% over the last decade, the mega-cap semiconductor designer is a force to reckon with. With a market capitalization valued at $1.78 trillion, let’s delve into the potential trajectory for NVDA stock in the coming 12 months.
A Snapshot of Nvidia
Nvidia is a key player in providing graphics computing and networking solutions across the globe. Its versatile products cater to various sectors including gaming, professional visualization, data centers, and automotive industries. The clientele spans from original equipment manufacturers to cloud service providers and auto manufacturers, underlining its diverse market reach.
Nvidia’s Edge in AI
Artificial intelligence (AI) emerges as one of the foremost megatrends anticipated to shape the future over the next couple of decades. A report from Statista projects a significant expansion in the total addressable market for AI-powered solutions, slated to grow from $241 billion in 2023 to $738 billion by 2030, with an annual growth rate surpassing 15%. Nvidia, with its prowess in designing and supplying AI chips, capitalizes on this trend. The surge in demand for AI chips, bolstered by projections such as those from the International Energy Agency (IEA), foresees a doubling of energy consumption by data centers within the next three years. This underscores the robust infrastructure development essential for scaling AI products, positioning Nvidia as a prime investment avenue.
Robust Revenue Growth
Nvidia’s revenue trajectory has been impressive, with sales soaring to $45 billion in the past 12 months from $26 billion in fiscal 2023. Despite its substantial size, Wall Street anticipates even further growth, with projections reaching $59.16 billion in fiscal 2024 and $94.46 billion in fiscal 2025. The forthcoming Q4 results, slated for release after the closing bell on Wednesday, Feb. 21, are awaited eagerly by investors. Leveraging an asset-light model, Nvidia boasts a free cash flow of $17 billion in the last four quarters, far surpassing its rival semiconductor stock Advanced Micro Devices (AMD) with a free cash flow of $1 billion. Furthermore, the adjusted earnings per share are forecasted to reach $115 by the end of fiscal 2028. If Nvidia’s stock is valued at 25 times forward earnings, it could reach a price of $2,875 in the next four years, indicating a potential upside of 300% from current levels.
Setting Targets for NVDA Stock
In anticipation of the upcoming earnings report, analysts at prominent investment banks including Morgan Stanley (NYSE:MS) and Goldman Sachs (NYSE:GS) have revised their price targets for NVDA stock upwards. Morgan Stanley now sets its price target at $750, following an increase of $147, while Goldman Sachs anticipates NVDA stock to reach $800, representing a premium of about 10% from current levels. Among the 38 analysts covering Nvidia stock, 33 advocate a “strong buy,” two recommend a “moderate buy,” and three suggest a “hold.” Despite already trading above its mean target price of $675.52, the Street’s highest price target of $1,100 implies an anticipated upside of 51%.
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Author Faith Yakubu 
