Wall Street Analysts Favor Nvidia and The Trade Desk Despite Market Volatility

The technology sector has consistently delivered substantial growth stocks over the past forty years, with artificial intelligence (AI) poised to create even more wealth-building prospects for investors.

Despite a recent market sell-off resulting in declines for leading tech stocks, analysts remain optimistic about two high-growth companies: Nvidia (NASDAQ: NVDA) and The Trade Desk (NASDAQ: TTD). The consensus price targets for these stocks indicate significant potential upside from their current discounted prices. Here’s why Wall Street may have valid reasons for that optimism.

1. Nvidia

Powerful graphics processing units (GPUs) are essential for teaching computers to think autonomously, and this demand has spurred remarkable growth for Nvidia. Wall Street’s average price target is currently 47% above the company’s share price of $111.

Nvidia’s revenue soared over the past year, more than doubling to $130 billion, with data center sales comprising 88% of that total. Analysts anticipate revenue will exceed $200 billion this year, driven by increased demand for new data center chips.

The Blackwell computing system, designed for advanced AI workloads, is expected to be a primary growth driver in the upcoming year. CEO Jensen Huang noted in the fiscal Q4 earnings report that they have significantly ramped up production, achieving billions in sales in the first quarter.

Image source: Nvidia.

However, not all analysts are optimistic. The chip industry typically experiences cyclical trends, and Nvidia’s dependency on large data center operators raises concerns. There is uncertainty about whether these operators will continue to invest heavily in AI infrastructure, which has contributed to this year’s decline in Nvidia’s stock price.

Importantly, two of Nvidia’s major clients, Microsoft and Alphabet‘s Google, indicated in their first-quarter earnings that they plan to continue significant investments in data center infrastructure this year—positive news for Nvidia.

If data center investment remains strong, Nvidia could see its stock approach Wall Street’s projection within the next year, with even larger gains anticipated over the long term. The stock trades at a reasonable 25 times this year’s earnings estimate, suggesting potential near-term upside.

2. The Trade Desk

The Trade Desk is a leading platform for digital ad buying, boasting nearly a 1,700% return to investors since 2016. Although the company experienced a rare revenue miss last quarter, analysts are still optimistic, projecting an average price target that is 64% higher than the current $53 share price.

Last quarter, The Trade Desk continued to exceed the growth of the digital ad market, reporting a year-over-year revenue increase of 26%. This revenue is generated from fees charged for ad spending and other services on its platform, driving strong profitability and cash flow.

Despite the growth, revenue fell short of analyst expectations, leading to a sell-off. External factors, including tariffs and economic pressures, may impact the ad market and slow the company’s growth. However, the recent decline in stock prices seems to incorporate these risks.

The Trade Desk estimates its addressable market at $1 trillion, with only $12 billion in ad spending on its platform last quarter—indicating substantial growth potential. The company is investing in AI to enhance its services, with plans for all customers to use its Kokai AI platform by the end of 2025.

This expansive opportunity, coupled with a current revenue growth estimate of 17% for 2025 and improving margins, sets the stage for potential earnings growth that could yield significant investor returns in the coming years.

Though uncertainty remains in the ad market, the stock’s recent correction might present a compelling buying opportunity, as it is now priced at a reasonable 30 times this year’s earnings projection.

Conclusion

As the tech industry continues to evolve, Nvidia and The Trade Desk present promising investment prospects regardless of current market volatility. Investors considering a position in these stocks may find favorable valuations and strong growth potential in the years ahead.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.