ai chip overlord Nvidia (nvda.us), which is dubbed "the most important stock on earth" by Goldman Sachs, has soared 170% since 2024 after its stock price soared 240% in 2023. However, Nvidia has fully benefited from this unprecedented AI craze. The surge in stock prices seems to have cooled down significantly in the short term, causing investors to begin weighing whether their current strategy is to cash out, continue to hold, or continue to buy the stock on dips.
From a longer time perspective, NVIDIA's stock price has soared by more than 1,000% since October 2022. This week, it once became the world's highest market value listed company and topped the throne of "Global Stock King" for the first time. After this 1000% soaring AI carnival, global funds may return to rational thinking from the fanatical and irrational influx of following the trend, which may mean that Nvidia's stock price, which has repeatedly reached new highs, will adjust downward or go sideways in the short term, but it is difficult to change. "AI sells shovel people" Nvidia's stock price has a "long-term rise" in the AI era.
Wall Street analysts who are bullish on Nvidia’s stock price have emphasized that Nvidia will continue to rise and may hit US$150 or even US$200 during the year (Nvidia’s stock price was US$130.780 as of Thursday’s closing). Although Nvidia’s stock price fell sharply on Thursday due to the panic selling pressure caused by the upcoming expiration of stock options on the “Three Witch Days” and the profit-taking pressure of retail investors, Bank of America’s Analysts believe that the stock still represents a very attractive investment opportunity, and Bank of America emphasized that any decline in Nvidia stock should be viewed as an opportunity to buy more shares on the dip.
Nvidia h100/h200/gb200 and other ai gpu are the core hardware that drives major artificial intelligence applications such as chatgpt and sora. Since 2024, has required computing power and large ai models for various ai applications like chatgpt, claude and sora. The demand for computing power on the iterative training end continues to grow explosively, comprehensively promoting the expansion of global AI data centers and stimulating a surge in demand for server AI chips such as Nvidia AI GPUs.
In late May, AI chip overlord Nvidia, which was dubbed "Earth's Most Important Stock" by Goldman Sachs, announced unparalleled results that shocked global investors, which can be said to dispel people's expectations of the slowdown in spending by artificial intelligence-related companies Worry. NVIDIA has once again single-handedly strengthened the "belief in AI" among technology stock investors, thus driving the continued rise of U.S. technology stocks. It has also helped NVIDIA's stock price start a new round of crazy rise, constantly setting new historical highs that shock investors. Bit.
NVIDIA q1's total revenue increased by 262% year-on-year to US$26 billion. Total revenue hit a record high, and the year-on-year growth rate of total revenue was NVIDIA's third consecutive quarter with a year-on-year growth rate of more than 200%. With the help of strong demand for H100/H200 GPUs, NVIDIA's Q1 data center revenue increased by 427% year-on-year to US$22.6 billion, a record high.
Therefore, NVIDIA, headquartered in Santa Clara, California, is at the forefront of a large-scale technological change in mankind. Global investors are betting with real money that NVIDIA will become the leader in the AI era. Wall Street expects Nvidia's revenue to at least double to US$120 billion in fiscal 2025, and is expected to continue to increase to US$160 billion in the next fiscal year, and may even reach US$200 billion. In comparison, Microsoft (msft.us), which also has a market capitalization of over US$3 trillion, is only expected to see its revenue grow by only about 16% in the current fiscal year.
Nvidia stock's eye-popping performance has attracted investors worried about missing out on more gains, who have relied on a buy-on-the-dip strategy to keep buying Nvidia. However, this has also led to increasingly higher valuations for Nvidia's stock; for example, its forward price-to-earnings ratio has surged about 80% this year. When even minor bad news hits, it may make the company's stock price more susceptible to a sharp correction in the short term.
"Past unparalleled performance should not be the basis for investment decisions," said Chuck Carlson, chief executive of horizon investment services. “For a stock like Nvidia that has gone through a huge surge, it’s hard not to have that be an important factor in investment decisions because there’s always a sense of chasing."
NVIDIA's long-short confrontation has finally begun to escalate.
From 2023 to 2024, NVIDIA's stock price trend has allowed long-term bullish investors to obtain high returns, allowing skeptical short-selling forces to be punished with "sky-high prices". The company's stock price has risen 170% so far in 2024, and its market value has soared to more than 3.2 trillion US dollars. It once surpassed Microsoft and Apple this week, and relies on this higher weight to drive the overall earnings per share expectations of S&P 500 index companies to continue to rise. . However, with the sharp correction of Nvidia’s stock price on Thursday, the short forces that once caused violent suppression gradually recovered on the eve of the “Three Witches”, and the confrontation between Nvidia’s long and short forces finally began to escalate.
Optimistic investors have pointed out that, NVIDIA relies on the unbreakable AI ecological barriers built by the CUDA platform and high-performance GPUs. Its absolute dominance in the field of artificial intelligence chips is a key reason for their bullishness. The ultra-high performance of NVIDIA AI GPUs and their continuous participation in many large-scale data around the world for many years. The center's accelerated computing project makes its core position in the data center difficult to replace. is used by global AI software developers to program, optimize and accelerate artificial intelligence processors, and develop AI training/inference systems that cannot be bypassed. The CUDA software framework also makes Nvidia's leading position almost unbreakable. Ivana Delevska, founder and chief investment officer of
spear Invest, is still optimistic about the long-term prospects of Nvidia stock. She expects Nvidia's performance to continue to exceed Wall Street analysis. Analysts' consensus forecast. Nvidia is the agency's largest holding in the Spear Alpha ETF (sprx.us), accounting for nearly 14% of the fund.
"If (the stock price) goes up like it is now, but earnings don't really change, Yes, we would be very concerned," Derevska said. "But Nvidia's growth is very strong and we're in a position now that's backed by pretty solid earnings. "
In fact, according to statistics from lseg datastream, NVIDIA's current forward P/E ratio of about 45x is only slightly higher than its 5-year average P/E ratio of 41x, although NVIDIA's expected P/E ratio at the beginning of this year was only 25x. At the same time, The valuation is also significantly lower than the astonishing valuation of more than 84x about a year ago. Tom Plumb, president of Plumb Funds, said he sees opportunities for Nvidia chips outside of artificial intelligence. Substantially undervalued. The company has held Nvidia stock for more than seven years and is the largest holding of its two flagship funds. “What we are really talking about is data and access to data,” Plame emphasized. “They have the most. The fastest and smartest chip products can do this, and not only in the AI field. "
In addition, the forces that are cautious about Nvidia's stock price have gradually grown, mainly worried that Nvidia's future performance may not meet Wall Street's optimistic growth expectations. Gil Luria, an analyst from D.A. Davidson, said, Nvidia has a "truly revolutionary" chip product and has achieved "unprecedented performance growth." However, he has a "neutral" rating on the stock and a price target of just $90 on the stock on Thursday. The price is $130.78.
Looking ahead to the next few years, analyst Luria said he doubts that Nvidia's core customer groups, such as Amazon AWS and other data computing giants, will continue to spend enough money to drive Wall Street's response. "The caution about Nvidia comes from the long-term performance outlook," Luria said. "This unparalleled performance may be difficult to sustain.
Billionaire investor Stanley Druckenmiller said last month that he was cutting his position in Nvidia in early 2024. "Artificial intelligence may be a little overhyped now, but in the long run, artificial intelligence technology From a development perspective, perhaps Nvidia is still undervalued. Carlson of
horizon Investment Services thinks Nvidia should continue to be a "buy," but because of the stock's relatively high valuation, it is unlikely to be included in Horizon Investments' roughly 30-stock portfolio.
Other concerns include the eventual erosion of Nvidia’s absolute market leadership in data center AI chips. technology giants Microsoft, Facebook's parent company Meta and Google's parent company Alphabet are competing to develop self-developed data center AI chips, and strive to add self-developed AI chip computing power to their own AI software developer ecosystem and cloud computing power service system , which will undoubtedly put pressure on Nvidia’s AI chip revenue expectations.
Analysts from Morningstar said that Nvidia's core large customers such as Amazon, Microsoft and Meta will eventually seek to reduce their reliance on Nvidia chips and diversify their supplier base. Morningstar's fair value estimate for Nvidia is just $105.
Morningstar analyst Brian Colello wrote this month: "Nvidia currently occupies a dominant position in artificial intelligence, and if it can maintain its leadership position over the next decade, the company's profitability will be "The sky's the limit." " However, any signs of successfully developing alternative computing products may greatly limit the upside of Nvidia's stock price."
From a long-term holding perspective, the rise of "Earth's Most Important Stock". It may be far from over
As billionaire investor Stanley Druckenmiller said, from the perspective of the long-term development of artificial intelligence technology, may be called "the most important stock on earth" Nvidia's value is still underestimated.
Rosenblatt, a well-known Wall Street investment institution, recently released a major research report. The core content is: Based on the potential prosperity of NVIDIA's CUDA-centered software business, even if the share price of NVIDIA, the AI chip overlord, has skyrocketed in one year, but in the next 12 months The chip giant's stock price will continue to climb, with Nvidia stock expected to trade 50% above current levels. This is the view from rosenblatt chip industry analyst Hans Mosesmann. In this research report, he significantly raised the agency’s 12-month target stock price for Nvidia from $140 to an astonishing level of $200 per share. , ranking among Wall Street’s highest target prices for Nvidia.
rosenblatt's latest bullish forecast also means that the "new king of the global stock market" NVIDIA, which recently won the title of "the world's highest market capitalization listed company" for the first time, may have a total market value of US$5 trillion within 12 months. Looking forward, analyst Mossman said that the real source of NVIDIA's strong profits is not only its AI GPU products focusing on AI hardware infrastructure, but also NVIDIA's software business, which is synergized by NVIDIA's popular CUDA software and hardware. The platform leads the way in an all-round way. That is, "cuda+ai gpu", together form Nvidia's extremely powerful moat.
Last month, Beth Kindig, a technology industry analyst from the well-known investment institution I/O Fund, was also very optimistic about the revenue expectations of NVIDIA's software business with CUDA as its core. The long-term market value outlook for NVIDIA given by i/o fund analyst Jin Di is even more radical. The analyst released a research report last month saying that it is expected that by 2030, NVIDIA's stock price will surge by more than 200% from the current level, and the market value is expected to reach 10 trillion U.S. dollars (Nvidia’s current market value is about 3.2 trillion U.S. dollars).
Jindi also predicts in the report that the total potential market size of the global AI data center market will reach 400 billion US dollars by 2027, and will reach 1 trillion US dollars by 2030, and the data center AI chip market is expected to be mainly driven by Nvidia occupy, rather than its largest competitors AMD or Intel. "Nvidia will have the lion's share of that," Jindy said. "This is largely due to the CUDA ecology and the powerful performance of NVIDIA AI GPU.
Although NVIDIA's stock price brought panic selling pressure on the eve of Friday's "Three Witches" and retail investors were under the pressure of profit-taking There has been a sharp decline, but analysts at Bank of America believe that the stock still represents a very attractive investment opportunity. Bank of America emphasized that any decline in Nvidia stock should be regarded as a bargain buy. An opportunity to invest in more stocks.
Bank of America analysts wrote in the latest report that investors should continue to be optimistic about the chip giant that promotes the prosperity of AI, and Bank of America reiterated its "buy" rating on Nvidia and a target price of up to $150. That means the stock has room for about 15% upside in 12 months.
Bank of America emphasized in the report that the hardware-side deployment cycle of generative artificial intelligence (genai) may be as long as 3-5 years, but it is currently only in its second year. It is estimated that Nvidia has an opportunity of up to 300 billion US dollars to take advantage of. This That's roughly three times the company's expected revenue for this year. Bank of America also predicts that Nvidia’s next-generation AI GPU based on blackwell architecture is expected to bring huge revenue contributions.
