The year 2023 has proven to be nothing short of remarkable for Nvidia (NASDAQ:NVDA), marking a significant turnaround after losing two-thirds of its market capitalization in 2022. The stock has not only recovered but has more than tripled, propelling Nvidia into the exclusive trillion-dollar club.
Closing with gains for ten consecutive trading sessions, NVDA is currently trading near $500, edging closer to its earlier all-time highs. As the semiconductor giant prepares to unveil its fiscal Q3 2024 earnings, anticipated on November 21, the market eagerly awaits the outcome during this abbreviated holiday week. The question on everyone’s mind is whether Nvidia can sustain its upward trajectory, potentially reaching the psychologically significant level of $1,000.
Nvidia’s fiscal performance this year has exceeded expectations, with earnings for both the fiscal first and second quarters surpassing analysts’ estimates. Revenues for fiscal Q1 exceeded projections, and the revenue guidance for the fiscal second quarter surpassed expectations by over 50%. The company reported revenues of $13.51 billion, more than double the corresponding quarter last year and well ahead of both its guidance and analysts’ predictions.
Looking ahead, analysts project a remarkable rise in Nvidia’s revenues, estimating a 170% increase in the fiscal third quarter and a 191% rise in the fourth quarter of 2024. The chipmaker’s revenues are expected to more than double for the fiscal year, with a 47% projected increase in the following fiscal year.
Nvidia’s average analyst price target stands at $625.53, but some experts are even more optimistic. The Street’s highest target price envisions Nvidia rallying above $1,000 per share, more than double its current value. If realized, this would place Nvidia in the elite company of trillion-dollar giants Apple (NASDAQ:AAPL) and Microsoft (NASDAQ:MSFT).
While Nvidia currently trades at a next 12-months (NTM) price-to-earnings multiple of 32.9x, comparable to Microsoft but ahead of Apple, its valuation premium reflects robust top-line and bottom-line growth. Nvidia’s projected fiscal year 2025 revenues of $79.6 billion, almost 8 times its fiscal year 2021 figures, outpace growth estimates for Apple and Microsoft.
However, the sustainability of Nvidia’s growth hinges on the artificial intelligence (AI) theme. Current demand for AI chips remains high, and despite export bans to China, Nvidia anticipates continued strong sales. The pricing strength of its AI chips contributes to record profits. Still, skepticism exists about maintaining current growth rates, evident in recent actions by notable investors such as George Soros trimming his stake and Michael Burry opening a short position in the iShares Semiconductor ETF, a major holder of Nvidia.
Nvidia has been a consistent performer, witnessing substantial growth over the past 20 years. With a presence in various emerging industries, including generative AI, gaming, and autonomous driving, the company remains optimistic about its future opportunities. Rosenblatt expects Nvidia’s stock price to surpass $1,000 within the next 12 months, emphasizing the company’s innovative track record and central role in high-end technologies.
In conclusion, the question of whether Nvidia shares can rise to $1,000 seems less a matter of “if” and more a matter of “when,” given the company’s historical performance and its pivotal role in advancing technology.
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