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Nvidia (NVDA) is among the hottest stocks in the world in 2024. Valued at a market cap of $3.22 trillion, Nvidia stock has surged close to 900% since November 2022 - and bullish analysts see more upside ahead.
Today, Nvidia is the third-largest company globally in terms of market cap, and is in a close race with Microsoft (MSFT) and Apple (AAPL).
The semiconductor giant recently announced a stock split, making it more attractive to retail investors. As analysts continue to raise their price targets to keep up with NVDA's progress, let’s see if this high-flying tech stock is still a good buy right now.
Nvidia is Growing at a Fast Pace
Despite its massive size, Nvidia is growing at a remarkable clip. In fiscal Q1 of 2025 (ended in April), Nvidia reported revenue of $26.04 billion and adjusted earnings per share of $6.12, higher than Wall Street's consensus estimates of $24.65 billion and $5.59 per share, respectively.
The chip giant also forecast sales of $28 billion in fiscal Q2, above estimates of $26.6 billion. While sales grew 262% year over year, its operating leverage enabled Nvidia to increase earnings by 461% in the last 12 months.
Nvidia is at the epicenter of the artificial intelligence (AI) megatrend, as Big Tech giants such as Microsoft, Google (GOOGL) (GOOG), Amazon (AMZN), and Meta (META) are all investing billions into this niche of the market to gain a first-mover advantage. These mega-cap giants are buying Nvidia's graphics processing units or GPUs, which are chips required to deploy AI-powered applications.
During Q1, Nvidia’s data center sales, which include AI chips, grew by 427% year over year to $22.6 billion. Prior to the AI boom, Nvidia generated the majority of its sales from gaming chips. Notably, Nvidia is even more optimistic about demand for its next-generation AI GPU, Blackwell, which will be added to data centers by Q4 of fiscal 2025.
What Could Drive Nvidia Stock Higher?
According to a CNBC report, the upcoming rebalancing of the Technology Select SPDR Fund (XLK) could attract around $10 billion in fund flows to NVDA. While Microsoft, Apple and Nvidia are all trading around a similar market cap, the diversification rules of the ETF mean that there's a limit on the cumulative weight of the stocks that account for more than 5% of the fund.
As a result, Nvidia’s weight in the XLK ETF could increase from 6% to 21%. Alternatively, Apple’s weight will fall from 22% to 4.5%.
NVDA Stock Scores New Street-High Target Prices
Just today, Rosenblatt analyst Hans Mosesmann set a new Street-high price target of $200 for NVDA, up from his prior target of $140. The new target implies expected upside of 48.6% from Monday's closing price.
According to Mosesmann, “the real narrative lies in the software that complements all the hardware goodness," and “We anticipate this software aspect will significantly increase in the next decade in terms of overall sales mix, with an upward bias to valuation due to sustainability.” The analyst's price target is based on a multiple of 40x forward earnings.
Previously, Susquehanna's Christopher Rolland had upped the ante on Monday to $165 from $145, based on an even richer 51.5x earnings multiple - which the analyst said is “warranted as [Nvidia] is well-positioned to take advantage of flourishing end markets.”
Before this week's rush of new Street-high price targets, the high-water mark belonged to investment firm Oppenheimer, which raised its 12-month target price for Nvidia to $150 from $100 on June 11, shortly after the stock's 10-for-1 stock split. Analyst Rick Schafer said the firm updated its financial model to account for the higher number of outstanding shares and the attractive roadmap for Nvidia’s compute and networking businesses.
Out of the 40 analysts covering NVDA stock, 35 recommend “strong buy,” two recommend “moderate buy,” and three recommend “hold.” Given this bullish configuration, there may be more price-target increases still to come.
Nvidia is valued at a premium due to its stellar sales and earnings growth. Wall Street expects Nvidia to end fiscal 2029 with adjusted earnings per share of $7.25. So, if NVDA stock is priced at 30x forward earnings, it should trade around $225 by May 2028.
On the date of publication, Aditya Raghunath did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
