NVIDIA’s Dominance in AI Sector
Semiconductor giant NVIDIA (NVDA) has seen a remarkable 155% surge in its stock this year, growing by 179% over the past year and a staggering 2600% over the last five years, with a market cap reaching $3 trillion. Despite trading at higher Price/Earnings and Price/Book ratios compared to the industry, NVIDIA holds a significant market share in AI chip design. Its clients include tech giants like Microsoft, Google, Oracle, and Meta, along with heavy reliance from autonomous vehicle companies like Tesla. The company’s AI chips, notably the H200, are vital in training language models and power inference, leading to increased demand and GPU shortages.
Rising Demand for Blackwell AI Chip
NVIDIA’s CEO Jensen Huang highlighted the unprecedented demand for the Blackwell artificial intelligence chip, projecting billions in revenue for the company in the upcoming fiscal quarter. Additionally, plans to enhance the AI platform annually for increased performance bode well for future growth.
Impact of Recent Stock Split
The completion of a 10-for-1 stock split in June has not only made NVIDIA’s shares more accessible but also ignited retail interest and increased liquidity. Analysts even anticipate NVIDIA becoming the first $10 trillion company in the future.
Earnings Growth Forecast
Despite an expected 116.2% earnings growth this year, NVIDIA’s growth rate is likely to moderate in the coming years. The company is still projected to outperform the industry, with a 41.70% growth rate over the next five years compared to the industry’s 17.80%.
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Analyst Sentiment and Price Target
Analysts expect NVIDIA’s earnings report on November 19, 2024, with a varied sentiment. While short-term price targets suggest an average of $149.99 per share, ranging from $90.00 to $200.00, representing a potential 22.09% increase from the last closing price of $122.85.
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Exploring NVDA ETFs
Consider NVDA-heavy semiconductor ETFs to capitalize on the AI boom and high growth prospects while minimizing company-specific risks. ETFs like Strive U.S. Semiconductor ETF, VanEck Vectors Semiconductor ETF, Technology Select Sector SPDR Fund, Grizzle Growth ETF, and TrueShares Technology, AI and Deep Learning ETF offer exposure to NVIDIA’s performance.
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