Nvidia’s Stock: Will It Hit $150 Before 2025?
Nvidia (NASDAQ: NVDA) is experiencing a strong surge in 2024. At the start of the year, the stock traded for about a split-adjusted $50 and has now climbed to approximately $130. The pressing question now is whether Nvidia can reach $150 before the end of 2024, potentially marking a second consecutive year of tripling its stock price.
With many trading days still left in the year, the possibility of unexpected movements remains.
GPUs Fueling the AI Boom
Nvidia’s remarkable growth is primarily linked to the escalating competition in artificial intelligence (AI). Numerous companies are working to build leading AI models, which has driven cloud computing firms to buy more Nvidia graphics processing units (GPUs).
GPUs excel in their ability to handle multiple calculations simultaneously. Their capability to connect thousands in clusters allows for rapid processing of demanding AI tasks.
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These GPUs are quite an investment. Take the popular Nvidia H100, which costs around $25,000 each. When companies deploy thousands, such as the 10,000 used by Tesla‘s Dojo computer, costs can quickly add up to about $300 million, excluding additional system components.
However, Nvidia cannot rely solely on GPU sales. To sustain growth, the company is betting on its new GPU architecture, Blackwell. Blackwell promises significant improvements over the previous Hopper architecture, consuming less energy and enabling faster calculations. This advancement may encourage clients to upgrade their hardware, potentially fueling further growth.
While Blackwell’s launch has faced delays, production is set to ramp up in the fourth quarter of 2024. Nvidia’s upcoming Q3 fiscal year 2025 earnings report in late November could provide key insights that propel the stock toward $150.
High Expectations for Nvidia’s Earnings
Nvidia’s stock currently reflects high expectations. It trades at 48.6 times its forward earnings, a significant premium.
NVDA PE Ratio (Forward) data by YCharts
Typically, companies do not maintain such high valuations without consistent rapid growth. They either meet these expectations, gradually reducing valuation, or fall short, leading to a stock price drop and a corresponding drop in valuation.
So far, Nvidia has lived up to its lofty expectations, but it must continue to do so to deliver the returns that shareholders expect.
The question remains—can Nvidia reach $150 before the year ends? The buzz around AI is considerable, and strong Q3 results could create momentum. However, investors must wait until late November for these updates. Additionally, an impending election could sway the market’s reaction.
Looking ahead, uncertainties abound, yet one fact is evident: the integration of AI is just beginning. As the demand for GPUs grows to support AI capabilities, even if Nvidia does not achieve $150 this year, it seems likely to do so in 2025.
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Keithen Drury has positions in Tesla. The Motley Fool has positions in and recommends Nvidia and Tesla. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
