Nvidia Stock (NASDAQ:NVDA)
Investors remain optimistic about Nvidia (NASDAQ:NVDA) and its prospects for a highly successful summer, thanks to its dominant position in the generative AI race and superior performance in chip technology. This positive sentiment persists despite escalating geopolitical tensions between the United States and China, which have potential implications for the tech industry.
Nvidia’s Valuation
Nvidia’s stock has already risen by 3% in July, surpassing the Nasdaq Composite’s 1.2% gain. Year-to-date, the company’s shares have surged by an impressive 200%, propelling Nvidia, led by Jensen Huang, to a market capitalization exceeding $1 trillion. The milestone of reaching a $1 trillion market cap was initially achieved on May 30.
In a recent note to clients, Evercore ISI analyst C.J. Muse expressed confidence in Nvidia’s growth potential. Muse stated, “We continue to see upside to EPS of $10 in [calendar year 2023] for Nvidia (versus consensus $7.49), with our scenario implying growth to $30 by 2027 (at only 20% acceleration attach). Nvidia remains a top pick with beats and raises along with positive AI-related headlines driving continued momentum for shares through the year (and likely supporting the [semiconductor sector index] SOX higher as well).”
Nvidia is widely recognized as a frontrunner in the AI sector, primarily due to its advanced chips that power OpenAI’s ChatGPT platform. The company has also secured prominent generative AI chip deals with ServiceNow (NYSE:NOW) and Snowflake (NYSE:SNOW), further solidifying its position in the market. Strong demand for Nvidia’s products prompted the company to significantly raise its guidance on May 24. Nvidia now expects second-quarter revenue to be around $11 billion, a substantial increase compared to Wall Street’s earlier estimate of $7.2 billion.
As Nvidia prepares to report earnings on August 23, expectations are high for the company to provide robust and positive guidance. Analysts anticipate that Nvidia could add another $1 billion in sales from the end of the second quarter to the conclusion of the third quarter in October.
Despite the strong business momentum and the stock’s popularity among investors, Nvidia’s share price has experienced some turbulence in recent weeks. Reports suggesting that the United States plans to impose new restrictions on AI chip exports to China caused the company’s market capitalization to temporarily dip below $1 trillion. Nvidia CFO Colette Kress voiced concerns over the export curbs, stating that they could result in a permanent loss of opportunities for the US industry during a conference in late June.
Final Thoughts
Nonetheless, analysts have remained steadfast in their support for the company, and investors have pushed Nvidia’s valuation back above $1 trillion. Approximately 88% of sell-side analysts covering Nvidia rate the stock as a Buy, with an average price target of $470. If Nvidia reaches this target, the company’s market capitalization would reach around $1.24 trillion.
Experts assert that Nvidia’s position in the market is too lucrative for investors to ignore. “The recent step-function increase in the company’s data center revenue outlook, however, suggests that the company has entered a new phase of growth driven by the emergence and proliferation of generative AI,” noted Goldman Sachs analyst Toshiya Hari.
Featured Image: Megapixl
Author Faith Yakubu 
