Nvidia stock (NASDAQ:NVDA) is on a remarkable upward trajectory, and many experts believe this is just the beginning. One such expert is Eric Jackson, founder and president of EMJ Capital, who shared his optimistic outlook on Yahoo Finance’s Opening Bid podcast. Jackson predicts that Nvidia’s market cap could soar to $6 trillion by the end of the year, doubling from its current valuation of around $3.25 trillion. This article delves into the reasons behind Jackson’s bold forecast and what it could mean for Nvidia stock.
Nvidia’s Potential for Growth: Jackson’s optimism is grounded in Nvidia’s strong performance and promising future prospects. He anticipates that the company will deliver robust earnings reports in August and November, driven by sustained demand for its H100 and H200 chips. Additionally, the introduction of Nvidia’s new AI-focused Blackwell chips is expected to further boost the company’s earnings.
Demand for AI and Chips: The demand for Nvidia’s chips is a critical factor in Jackson’s forecast. Nvidia founder Jensen Huang has previously highlighted the strong demand trends for the company’s products. If Nvidia’s earnings reports meet expectations, Jackson believes that investors will be willing to pay a higher price-to-earnings multiple for the stock. Currently, Nvidia trades at a forward PE of about 50 times, nearly twice the broader market multiple.
Market Cap Milestones: Nvidia has already achieved significant milestones this year. On June 18, its market cap reached an astonishing $3.34 trillion, surpassing Microsoft (NASDAQ:MSFT) to become the world’s most valuable company. Although Nvidia has since lost this title to Apple (NASDAQ:AAPL) and Microsoft, its impressive performance has few detractors on Wall Street.
Positive Analyst Insights: Analysts like KeyBanc’s John Vinh have also expressed positive sentiments about Nvidia’s prospects. In a recent client note, Vinh highlighted that despite the impending launch of Blackwell in the second half of 2024, there are no signs of a demand pause. The demand for H100 remains robust, with rush orders continuing, and interest in the GB200 is greater than initially expected.
Skeptics and Competition: However, not all analysts share this bullish outlook. New Street Research analyst Pierre Ferragu recently downgraded his rating on Nvidia to Neutral, citing valuation concerns. Ferragu sees limited further upside based on supply chain insights and suggests that the bull case for Nvidia may not materialize beyond 2025.
Moreover, Nvidia’s success has attracted competitors, which could pose challenges to the company’s dominance. Goldman Sachs asset manager Brook Dane cautions that competition is inevitable, and Nvidia will need to navigate this landscape to maintain its leading position.
Conclusion: Nvidia stock has experienced an incredible rise, and according to experts like Eric Jackson, it has the potential to surge even higher. With strong earnings expected and sustained demand for its cutting-edge chips, Nvidia could reach a market cap of $6 trillion by year-end. While there are some concerns about valuation and increasing competition, Nvidia’s track record and innovative products position it well for continued success. Investors will be closely watching the company’s upcoming earnings reports and market performance to gauge whether this optimistic outlook will become a reality.
Featured Image: Freepik
