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Chip giant NVIDIA (NVDA - Free Report) has been a hot stock for more than a year. The company has been surpassing earnings and share-price expectations. NVIDIA logged a remarkable uptick of over 5% on Jun 5, pushing its market capitalization beyond $3 trillion for the first time.
Simultaneously, Apple (AAPL - Free Report) reclaimed a market cap exceeding $3 trillion, a milestone last reached in January. NVIDIA's market cap, however, surpassed Apple's and became the second-most valuable company in the U.S. stock market.
Inside NVIDIA’s Strength
Recently, the company announced new chip plans. Despite new products from competitors, NVIDIA's latest earnings report shows strong demand for its H100 chips, even with a more advanced chip, Blackwell, on the horizon. NVIDIA's Data Center revenues in the most recent quarter increased 427% year over year, making up 86% of the company's total revenues for the quarter.
The AI chipmaker is also hitting a series of new record highs on the upcoming 10-for-1 stock split, which will make its shares more affordable to a wider range of investors, including the ones who make small trades, and increase liquidity.
Bank of America analysts raised its price target to a high of $1,500, saying NVIDIA’s premium is justified by its growth outlook. Adam Gold, founder and chief investment officer at Katam Hill LLC, describes NVIDIA's lead in the market as a marathon runner with a substantial lead, as quoted on Bloomberg. Gold, who has owned NVIDIA shares since 2016, continues to add to his position, confident in the company's dominance.
Investors seeking to tap the opportune moment could consider ETFs having the largest allocation to this AI behemoth. These are Strive U.S. Semiconductor ETF (SHOC - Free Report) , AXS Esoterica NextG Economy ETF (WUGI - Free Report) , VanEck Vectors Semiconductor ETF (SMH - Free Report) , Grizzle Growth ETF (DARP - Free Report) and TrueShares Technology, AI and Deep Learning ETF (LRNZ - Free Report) .
Mammoth Lead in AI
NVIDIA’s rapid growth in AI technology has transformed it from a niche graphics processing unit maker to one of the world's most valuable companies, now worth nearly $3 trillion. Rivals like Advanced Micro Devices Inc. and Intel Corp. are attempting to catch up, but NVIDIA's dominance in AI remains intact.
Sales & Earnings Growth Estimates
The Zacks Consensus Estimate for NVIDIA’s current-quarter earnings growth is 132.59%, while the consensus estimate for sales growth is 109.12%. The growth rate, however, will likely cool down in 2026 as the consensus estimate is 21.13% for earnings growth and 22.25% for sales growth. NVIDIA’s gross margins are expected to rise to 76% this fiscal year from 59% two years ago.
Price Target
Based on short-term price targets offered by 40 analysts, the average price target for NVIDIA comes to $1,152.04. The forecasts range from a low of $608.40 to a high of $1,400.00. The average price target represents a decline of 1.06% from the last closing price of $1,164.37 as of Jun 4. However, with more activities coming from NVIDIA’s product launches and momentum continuing to build up, analysts may revise their target prices upward from here.
While NVIDIA shares are relatively pricey at 39 times profits expected over the next 12 months, they are much less expensive than the multiple of 60 they were trading at before its May 2023 earnings report, per analysts, as quoted on Bloomberg. Analysts’ profit estimates are rising even faster than the stock.
Any Wall of Worry?
Michael Kirkbride of Evercore Wealth Management notes that NVIDIA's only limitation is challenges to supply, with capital spending forecasts from major tech giants indicating increased investment in AI infrastructure.
As far as competition is concerned, Intel said that its Gaudi 2 and Gaudi 3 AI accelerators will offer substantial price savings to customers. And with companies spending billions on AI chips, any price savings will likely be a huge hit.
NVIDIA’s own customers, as Amazon, Google, and Microsoft will also try to cut their dependence on its chips, save on capital expenditures and ensure seamless transition of chip deliveries. However, all these threats are unlikely to show up in the near term.
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Nvidia ETFs: Is There More Room to Run?
Chip giant NVIDIA (NVDA - Free Report) has been a hot stock for more than a year. The company has been surpassing earnings and share-price expectations. NVIDIA logged a remarkable uptick of over 5% on Jun 5, pushing its market capitalization beyond $3 trillion for the first time.
Simultaneously, Apple (AAPL - Free Report) reclaimed a market cap exceeding $3 trillion, a milestone last reached in January. NVIDIA's market cap, however, surpassed Apple's and became the second-most valuable company in the U.S. stock market.
Inside NVIDIA’s Strength
Recently, the company announced new chip plans. Despite new products from competitors, NVIDIA's latest earnings report shows strong demand for its H100 chips, even with a more advanced chip, Blackwell, on the horizon. NVIDIA's Data Center revenues in the most recent quarter increased 427% year over year, making up 86% of the company's total revenues for the quarter.
The AI chipmaker is also hitting a series of new record highs on the upcoming 10-for-1 stock split, which will make its shares more affordable to a wider range of investors, including the ones who make small trades, and increase liquidity.
Bank of America analysts raised its price target to a high of $1,500, saying NVIDIA’s premium is justified by its growth outlook. Adam Gold, founder and chief investment officer at Katam Hill LLC, describes NVIDIA's lead in the market as a marathon runner with a substantial lead, as quoted on Bloomberg. Gold, who has owned NVIDIA shares since 2016, continues to add to his position, confident in the company's dominance.
Investors seeking to tap the opportune moment could consider ETFs having the largest allocation to this AI behemoth. These are Strive U.S. Semiconductor ETF (SHOC - Free Report) , AXS Esoterica NextG Economy ETF (WUGI - Free Report) , VanEck Vectors Semiconductor ETF (SMH - Free Report) , Grizzle Growth ETF (DARP - Free Report) and TrueShares Technology, AI and Deep Learning ETF (LRNZ - Free Report) .
Mammoth Lead in AI
NVIDIA’s rapid growth in AI technology has transformed it from a niche graphics processing unit maker to one of the world's most valuable companies, now worth nearly $3 trillion. Rivals like Advanced Micro Devices Inc. and Intel Corp. are attempting to catch up, but NVIDIA's dominance in AI remains intact.
Sales & Earnings Growth Estimates
The Zacks Consensus Estimate for NVIDIA’s current-quarter earnings growth is 132.59%, while the consensus estimate for sales growth is 109.12%. The growth rate, however, will likely cool down in 2026 as the consensus estimate is 21.13% for earnings growth and 22.25% for sales growth. NVIDIA’s gross margins are expected to rise to 76% this fiscal year from 59% two years ago.
Price Target
Based on short-term price targets offered by 40 analysts, the average price target for NVIDIA comes to $1,152.04. The forecasts range from a low of $608.40 to a high of $1,400.00. The average price target represents a decline of 1.06% from the last closing price of $1,164.37 as of Jun 4. However, with more activities coming from NVIDIA’s product launches and momentum continuing to build up, analysts may revise their target prices upward from here.
While NVIDIA shares are relatively pricey at 39 times profits expected over the next 12 months, they are much less expensive than the multiple of 60 they were trading at before its May 2023 earnings report, per analysts, as quoted on Bloomberg. Analysts’ profit estimates are rising even faster than the stock.
Any Wall of Worry?
Michael Kirkbride of Evercore Wealth Management notes that NVIDIA's only limitation is challenges to supply, with capital spending forecasts from major tech giants indicating increased investment in AI infrastructure.
As far as competition is concerned, Intel said that its Gaudi 2 and Gaudi 3 AI accelerators will offer substantial price savings to customers. And with companies spending billions on AI chips, any price savings will likely be a huge hit.
NVIDIA’s own customers, as Amazon, Google, and Microsoft will also try to cut their dependence on its chips, save on capital expenditures and ensure seamless transition of chip deliveries. However, all these threats are unlikely to show up in the near term.