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Is NVIDIA (NVDA) Stock Worth Buying as Market Cap Tops $3T?
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NVIDIA Corporation (NVDA - Free Report) surpassed the $3 trillion market capitalization on Wednesday as it continues to benefit from the robust demand for its next-generation chips for artificial intelligence (AI) models. This makes the graphic processing unit (GPU) maker the third publicly traded U.S. company alongside Microsoft Corporation (MSFT - Free Report) and Apple Inc. (AAPL - Free Report) , which have a valuation of more than $3 trillion as of Jun 5.
NVDA stock rose 5.2% during yesterday’s intraday trading session and closed at $1,224.40, reaching its market capitalization of $3.012 trillion. With yesterday’s gain, NVIDIA overtakes Apple, which has a market capitalization of $3.003 trillion, as the second-highest valuing company in the U.S. market.
NVIDIA has witnessed a remarkable run, showcasing a staggering 148.7% surge in its stock price in this year so far. Considering this momentum, NVDA stock might overtake Microsoft’s $3.151 trillion market capitalization soon to become the highest-valuing company in the U.S. market. Notably, it took NVIDIA just around three months to attain the $3 trillion milestone from the $2 trillion market capitalization as of Mar 1, 2024.
The surge reflects investors' confidence in NVIDIA's strategic positioning, robust financial performance and pivotal role in shaping transformative technologies like AI, gaming and data center solutions.
However, the looming question remains — Can NVIDIA sustain this momentum for the rest of the year?
NVIDIA’s robust stock price performance has been primarily driven by hopes that the company will be a prime beneficiary of growing investments in generative AI. Given generative AI’s inherited opportunities and the company’s leadership in the space, we believe the NVDA stock is poised to carry the momentum for the rest of the year.
The growing demand to modernize the workflow across industries is expected to drive the demand for generative AI applications. The global generative AI market size is anticipated to reach $967.6 billion by 2032, according to a new report by Fortune Business Insights. The market is expected to expand at a CAGR of 39.6% from 2024 to 2032.
However, generative AI requires vast knowledge to create content and needs huge computational power. As a result, enterprises looking to create generative AI-based applications will be required to upgrade their existing network infrastructure.
NVIDIA’s next-generation chips with high computing power can be the top choice for enterprises. The company’s GPUs are already being applied in AI models. This is expanding NVDA’s footprint in untapped markets like automotive, healthcare and manufacturing.
The generative AI revolution is likely to create huge demand for its next-generation high computing powerful chips. Considering surging AI investments across the data center end market, NVDA expects its second-quarter fiscal 2025 revenues to reach $28 billion from $13.51 billion in the year-ago quarter.
Conclusion
NVIDIA’s strong product lineup, market leadership in AI, and continuous innovation make it an attractive investment opportunity. The company is highly regarded in the market, and savvy investors should capitalize on NVDA’s potential for long-term growth.
Currently, the long-term expected earnings growth rate for NVIDIA is an impressive 36.7%, significantly outpacing the Zacks Semiconductor – General industry’s rate of 18.6%. Its earnings has surpassed the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 18.4%.
Financially, NVIDIA is in a robust position, with substantial cash reserves that buffer it against market volatility. As of Apr 28, 2024, the company’s cash and cash equivalents stood at $31.44 billion, up from $25.98 billion on Jan 28, 2024.
However, NVIDIA’s stock trades at a one-year forward price-to-sales (P/S) ratio of 24.02, which is considerably higher than the Semiconductor – General industry’s forward P/S multiple of 16.37. While some might see this as a risk, we believe the premium is justified, given NVIDIA’s consistent financial performance and significant growth opportunities in emerging markets like automotive, healthcare and manufacturing.
Additionally, NVIDIA sports a Zacks Rank #1 (Strong Buy) and has a Growth Score of A at present, which is a favorable combination offering a solid investment opportunity, per Zacks’ proprietary methodology. NVDA’s Momentum Score of B makes it an attractive pick for investors.
Currently, the long-term expected earnings growth rate of CrowdStrike is an impressive 22.3%, outpacing the Zacks Internet - Software industry’s rate of 19.7%. CRWD stock has rallied 34.1% year to date, outperforming the Internet – Software industry’s growth of 8.2%.
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Is NVIDIA (NVDA) Stock Worth Buying as Market Cap Tops $3T?
NVIDIA Corporation (NVDA - Free Report) surpassed the $3 trillion market capitalization on Wednesday as it continues to benefit from the robust demand for its next-generation chips for artificial intelligence (AI) models. This makes the graphic processing unit (GPU) maker the third publicly traded U.S. company alongside Microsoft Corporation (MSFT - Free Report) and Apple Inc. (AAPL - Free Report) , which have a valuation of more than $3 trillion as of Jun 5.
NVDA stock rose 5.2% during yesterday’s intraday trading session and closed at $1,224.40, reaching its market capitalization of $3.012 trillion. With yesterday’s gain, NVIDIA overtakes Apple, which has a market capitalization of $3.003 trillion, as the second-highest valuing company in the U.S. market.
NVIDIA has witnessed a remarkable run, showcasing a staggering 148.7% surge in its stock price in this year so far. Considering this momentum, NVDA stock might overtake Microsoft’s $3.151 trillion market capitalization soon to become the highest-valuing company in the U.S. market. Notably, it took NVIDIA just around three months to attain the $3 trillion milestone from the $2 trillion market capitalization as of Mar 1, 2024.
The surge reflects investors' confidence in NVIDIA's strategic positioning, robust financial performance and pivotal role in shaping transformative technologies like AI, gaming and data center solutions.
However, the looming question remains — Can NVIDIA sustain this momentum for the rest of the year?
NVIDIA Corporation Price and Consensus
NVIDIA Corporation price-consensus-chart | NVIDIA Corporation Quote
NVIDIA Gains From GenAI Investment
NVIDIA’s robust stock price performance has been primarily driven by hopes that the company will be a prime beneficiary of growing investments in generative AI. Given generative AI’s inherited opportunities and the company’s leadership in the space, we believe the NVDA stock is poised to carry the momentum for the rest of the year.
The growing demand to modernize the workflow across industries is expected to drive the demand for generative AI applications. The global generative AI market size is anticipated to reach $967.6 billion by 2032, according to a new report by Fortune Business Insights. The market is expected to expand at a CAGR of 39.6% from 2024 to 2032.
However, generative AI requires vast knowledge to create content and needs huge computational power. As a result, enterprises looking to create generative AI-based applications will be required to upgrade their existing network infrastructure.
NVIDIA’s next-generation chips with high computing power can be the top choice for enterprises. The company’s GPUs are already being applied in AI models. This is expanding NVDA’s footprint in untapped markets like automotive, healthcare and manufacturing.
The generative AI revolution is likely to create huge demand for its next-generation high computing powerful chips. Considering surging AI investments across the data center end market, NVDA expects its second-quarter fiscal 2025 revenues to reach $28 billion from $13.51 billion in the year-ago quarter.
Conclusion
NVIDIA’s strong product lineup, market leadership in AI, and continuous innovation make it an attractive investment opportunity. The company is highly regarded in the market, and savvy investors should capitalize on NVDA’s potential for long-term growth.
Currently, the long-term expected earnings growth rate for NVIDIA is an impressive 36.7%, significantly outpacing the Zacks Semiconductor – General industry’s rate of 18.6%. Its earnings has surpassed the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 18.4%.
Financially, NVIDIA is in a robust position, with substantial cash reserves that buffer it against market volatility. As of Apr 28, 2024, the company’s cash and cash equivalents stood at $31.44 billion, up from $25.98 billion on Jan 28, 2024.
However, NVIDIA’s stock trades at a one-year forward price-to-sales (P/S) ratio of 24.02, which is considerably higher than the Semiconductor – General industry’s forward P/S multiple of 16.37. While some might see this as a risk, we believe the premium is justified, given NVIDIA’s consistent financial performance and significant growth opportunities in emerging markets like automotive, healthcare and manufacturing.
Additionally, NVIDIA sports a Zacks Rank #1 (Strong Buy) and has a Growth Score of A at present, which is a favorable combination offering a solid investment opportunity, per Zacks’ proprietary methodology. NVDA’s Momentum Score of B makes it an attractive pick for investors.
Another Stock Worth Considering
Another top-ranked stock from the broader technology sector is CrowdStrike Holdings, Inc. (CRWD - Free Report) . The stock has a Zacks Rank #2 (Buy), a Growth Score of A and a Momentum Score of B. You can see the complete list of today's Zacks #1 Rank stocks here.
Currently, the long-term expected earnings growth rate of CrowdStrike is an impressive 22.3%, outpacing the Zacks Internet - Software industry’s rate of 19.7%. CRWD stock has rallied 34.1% year to date, outperforming the Internet – Software industry’s growth of 8.2%.