Unveiling the Soaring Nvidia Stock
Following an impressive earnings report, Nvidia (NVDA) briefly ascended into the ranks of $2 trillion companies after its stock surged above $800, claiming the title of the most expensive stock among the “Magnificent 7.” The breathtaking rally in Nvidia’s stock positions it as a potential contender to become the largest U.S. company, overtaking giants like Microsoft (MSFT) and Apple (AAPL).
The Enigmatic Surge: Deciphering the Phenomenon
Nvidia’s stock meteoric rise can be attributed to the AI-driven price action it has witnessed over the past year. With a 61% surge this year adding to a 240% increase in 2023, and a staggering 481% rise over the last three years, Nvidia has surpassed its 2021 levels following a four-for-one split. The surge is fueled by its leadership in AI chip supply that has driven a major rerating of the company, transforming it into a market favorite.
Financial Fortitude and Growth Trajectory
Nvidia’s financial performance has been robust, with a revenue forecast of $24 billion for fiscal Q1 2025 and Wall Street analysts predicting revenues to surpass $100 billion this year and $130 billion next year. The company has witnessed a six-fold increase in revenues over the last four years, reflecting a consistent track record of execution and profitability amidst a market filled with growth uncertainties.
The Endless Ascent: Will Nvidia Ever Descend?
Despite its significant appreciation from 2022 lows, Nvidia’s valuation appears far from overstretched based on key metrics. Trading at a next 12-month price-to-earnings multiple of 32.1x, the stock presents a compelling case for further growth. With a consensus “Strong Buy” rating from analysts and upward-target revisions post its fiscal Q1 earnings, Nvidia’s unrelenting rally seems poised to continue.
Nvidia’s Quest for Global Dominance
With a Street-high target price of $1,400 from Rosenblatt Securities suggesting a potential market cap of $3.5 trillion, surpassing current leaders like Microsoft, Nvidia’s ambition to become the world’s largest company is no longer a far-fetched dream. History reveals the ever-changing landscape of dominant U.S. companies, with winners shifting based on financial performance and evolving market sentiments.
Perspectives on Valuation and Potential
While some market pundits, including Ashwath Damodaran, express concerns over Nvidia’s valuation, labeling it overvalued, there is a contrasting view that perceives the stock as a compelling growth opportunity. Nvidia’s momentum post-fiscal Q4 earnings call and positive market sentiment indicate a favorable outlook for the company, positioning it as a long-term investment with potential to achieve market supremacy.