Nvidia Corporation (NVDA) continues to reign supreme in the semiconductor industry as the era of artificial intelligence (AI) dawns, sparking burgeoning demand for the company’s top-notch chips. As AI technology advances, the hunger for Nvidia’s superior products is set to surge in the years ahead. With its firm grip on this domain, the company is poised to sustain robust profits.
In a remarkable feat, the stock soared by an extraordinary 238% in 2023, overshadowing the Nasdaq Composite’s gain of 44.5%.
However, the ascent of Nvidia’s stock is not solely fueled by AI. Over the past two decades, the company has consistently upheld the excellence of its offerings and consistently innovated to fortify its financial standing, culminating in a staggering 39,150% return over the last 20 years.
As of mid-February, the stock has surged 46.6% year-to-date, vastly outstripping Nasdaq’s 6.8% uptick. Nvidia is poised to unveil its fourth-quarter and full-year results on Feb. 21, and a multitude of analysts have raised their projections for the stock in anticipation of robust growth in the Data Center segment. It’s time to assess the collective analyst forecast for this quarter.
2024: A Potentially Pivotal Year for NVDA Stock
Nvidia has delivered formidable results in all three quarters of fiscal 2024 so far, driven by soaring demand for its innovative high-performance graphics processing units (GPUs), which find applications across virtually every industry.
In the third quarter, total revenue surged by 206% from the prior year to reach $18.1 billion. Additionally, adjusted earnings per share (EPS) skyrocketed sixfold to $4.02 from the year-ago quarter.
Despite grappling with U.S.-China trade concerns last year, Nvidia has managed to navigate this challenge. According to Reuters, the company plans to introduce a modified gaming chip to comply with China’s import regulations. Nevertheless, Nvidia anticipates a minor impact on the Data Center segment revenue in the fourth quarter, as China represents 20%–25% of that segment’s revenue.
Bearing this in mind, Nvidia’s management anticipates Q4 revenue to hover around $20 billion (plus or minus 2%). Investors are likely eager to gain insights into how Nvidia plans to address this situation in the long run and whether it will continue to exert a significant impact in the forthcoming quarters.
Meanwhile, analysts are predicting revenue of $20.46 billion and earnings of $4.61 per share for the quarter. For the full fiscal year 2024, analysts estimate a robust 119.5% revenue surge to $59.2 billion, coupled with a projected 270.5% spike in earnings to $12.38 per share.
In addition to its dominant Data Center segment, Nvidia boasts substantial growth potential in the Automotive sector. The advent of AI is also propelling the expansion of the automotive market. Nvidia’s strategic collaboration with Foxconn to manufacture next-generation electric vehicles (EVs) is poised to act as a growth catalyst. Furthermore, EV maker Li Auto has adopted Nvidia’s Drive Thor platform, while GWM (Great Wall Motor), ZEEKR, and Xiaomi have selected the Drive Orin platform to power their next-generation autonomous vehicles.
For fiscal 2025, analysts foresee substantial leaps in Nvidia’s revenue and earnings by 58.3% and 71.8% year-over-year, respectively. Presently, Nvidia is trading at 34 times the forward fiscal 2025 estimated earnings, compared to its five-year historical average price-to-earnings ratio of 65.1x. Given the projected 78% earnings growth, the valuation appears far from exorbitant.
Insights from Analysts
On Feb. 16, Barclays upped its target price for Nvidia stock to $850 from $650. Moreover, Oppenheimer analyst Rick Schafer also raised the price target to $850 from $650. Schafer anticipates a 22% surge in Nvidia’s Data Center revenue for the fourth quarter, emphasizing, “We see several structural tailwinds driving sustained outsized top-line growth, including generative AI, DC/AI accelerators, and autonomous vehicles. We believe these factors justify its valuation.”
In addition, Loop Capital Markets initiated a “buy” rating on the stock and set a new Street-high target price of $1,200, indicating a potential upside of 65.2% over the next 12 months.
The optimistic outlook for Nvidia stock is indisputable on Wall Street. Overall, NVDA maintains a “strong buy” rating within the analyst community. Out of the 38 analysts covering the stock, 33 recommend a “strong buy,” with two suggesting a “moderate buy” and three advising a “hold.” Nvidia has surpassed the average analyst target price of $680.93.
Nvidia: A Long-Term Investment
Owning a commanding 80% market share in chips, Nvidia’s standing as a semiconductor behemoth is set to endure for the long haul. Though Advanced Micro Devices (AMD) and Intel (INTC) are ramping up their AI investments, it seems that no other company currently poses a challenge to Nvidia’s dominance.
With anticipated hyper-growth, Nvidia remains relatively affordable, even for investors who feel it might be too late to venture into the stock. Another strong quarter could propel the stock to even greater heights in the blink of an eye. The present moment could be the opportune time to acquire and retain this hyper-growth stock indefinitely.
On the date of publication, Sushree Mohanty 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.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
5 Stocks Our Experts Predict Could Double In the Next Year
By submitting your email, you'll also get a free pivot & flow membership. A free daily market overview. You can unsubscribe at any time.
