Nvidia(NASDAQ: NVDA) is the hottest company on the planet right now — and it’s not even close. Indeed, the chip specialist is at the heart of the artificial intelligence (AI) revolution, and investors can’t seem to get enough.
Just days ago, Nvidia’s market cap rocketed past $3.3 trillion and briefly overtook Microsoft as the most valuable company in the world. With shares up roughly 150% so far this year, could Nvidia stock possibly keep going?
One Wall Street analyst thinks so. Hans Mosesmann of Rosenblatt Securities just raised his price target for Nvidia from $140 to $200. As of market close on June 21, a $200 price target implies 59% upside to Nvidia’s current price. To put this into perspective, Mosesmann is calling for Nvidia’s market cap to reach $5 trillion.
Let’s break down Nvidia’s rapid rise to become one of the world’s largest companies, and assess why now could be as good a time as ever to join the party.
Nvidia’s path to $3 trillion
The chart shows the change in Nvidia’s market cap so far in 2024. Roughly six months into the year, the company has added nearly $2 trillion in value. Not only is this unprecedented, but it’s arguably warranted.
NVDA Market Cap Chart
For Nvidia’s first quarter of fiscal 2025 (ended April 30), the company reported a 262% increase year over year in revenue. Nvidia’s largest source of business comes from data centers, which grew 427% year over year during the first quarter — reaching $22.6 billion.
What’s even better is that Nvidia isn’t just witnessing outsize revenue acceleration. The company’s gross margin expanded nearly 14 basis points year over year during the first quarter. The combination of increasing revenue and rising profit margins has fueled Nvidia’s operating income and cash flow.
For the quarter ended April 30, Nvidia’s free cash flow grew 465% year over year to $14.9 billion.
Clearly, the company is not struggling to generate growth in any part of its business. Let’s take a look at how Nvidia is reinvesting its profits, and what it could spell for the company’s future.
Could Nvidia stock keeping climbing higher?
Today, Nvidia is primarily a data center and chip business. While I suspect both of these services will remain important for Nvidia, there are some important details to discuss.
Namely, Nvidia is far from the only company competing in data center services or the semiconductor space. Companies including Vertiv have also been major beneficiaries of the AI boom, and have seen their own data center businesses take off. Furthermore, Nvidia faces some stiff competition from Intel and Advanced Micro Devices in the graphics processing units (GPU) arena.
Where Nvidia might have an edge is when it comes to innovation. Right now, Nvidia’s most popular GPUs are its H100 and A100 chips. However, the company recently released a new line of semiconductors called Blackwell.
When speaking about Blackwell during Nvidia’s most recent earnings call, management said, “Demand for H200 and Blackwell is well ahead of supply, and we expect demand may exceed supply well into next year.”
Although this is encouraging, Nvidia is not resting on its laurels. Earlier this month, Nvidia’s management previewed its next line of chips, dubbed Rubin. The pace at which Nvidia is innovating is undeniably impressive.
Essentially, the company has already created a success to its already popular H100 and A100 line, and then swiftly doubled down in research and development efforts to build an even more superior product to Blackwell.
If that weren’t enough to impress you, consider that Nvidia is also investing in the area of AI-powered robotics, as well as enterprise software. Earlier this year the company invested in Figure AI, a humanoid robot that is competing with Tesla‘s Optimus.
Furthermore, Nvidia is also an investor in Databricks — one of the world’s most valuable software start-ups.
Image source: Getty Images.
Is now a good time to invest in Nvidia stock?
When it comes to investing in Nvidia, there are two schools of thought. First, one could argue that the stock has risen too dramatically, too quickly. Behind this rationale, investors would argue that the potential of Blackwell, Rubin, and some of Nvidia’s other initiatives in software and robotics are already priced into the stock.
On the other hand, a closer look at valuation multiples might suggest otherwise.
NVDA PE Ratio Chart
The charts reflect Nvidia’s price-to-earnings (P/E) and price-to-free cash flow multiples over the last year. Notice anything interesting?
Despite Nvidia’s surging share price, its profitability valuation multiples are actually lower now than they were a year ago. This happens because Nvidia’s earnings and cash flow are accelerating at faster rates compared to the rise in the value of the company. This means that shares of Nvidia are technically less expensive today than they were this time last year.
Considering all the projects Nvidia is touching, I’m hard-pressed to see the company falling behind in the AI race. Moreover, considering shares look reasonably valued at the moment, I think Nvidia is a no-brainer — whether it reaches a $5 trillion milestone or not.
Should you invest $1,000 in Nvidia right now?
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Adam Spatacco has positions in Microsoft, Nvidia, and Tesla. The Motley Fool has positions in and recommends Advanced Micro Devices, Microsoft, Nvidia, and Tesla. The Motley Fool recommends Intel and recommends the following options: long January 2025 $45 calls on Intel, long January 2026 $395 calls on Microsoft, short August 2024 $35 calls on Intel, and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
