Nvidia (NASDAQ: NVDA) has ascended to the top echelons of the business world, commanding a colossal market cap surpassing $3 trillion. This feat catapulted Nvidia above the tech titan, Microsoft, for a brief moment, making it the most valuable company across global markets. With shares witnessing an unprecedented surge of about 150% since the year commenced, one might ponder if Nvidia’s stock can continue its stratospheric trajectory.
Enter Hans Mosesmann, a solitary figure amidst the Wall Street crowd, who recently lifted Nvidia’s price target from $140 to $200. As of June 21 closing bell, a target price of $200 implies a lofty 59% ascent from Nvidia’s current valuation. Mosesmann’s audacious prediction envisions Nvidia’s market cap soaring to an astronomical $5 trillion.
Delve into Nvidia’s meteoric evolution as it burgeons into one of the financial world’s behemoths, and unveil why this juncture might be ripe for investors to seize the moment.
The Trek to $3 Trillion: Nvidia’s Unprecedented Journey
Witness on the chart the seismic shift in Nvidia’s market capitalization during the annals of 2024. Barely halfway into the year, the company has amassed a staggering $2 trillion in value. This surge, utterly unmatched and arguably deserved, solidifies Nvidia’s dominance.
NVDA Market Cap data by YCharts
During Nvidia’s first quarter of fiscal 2025 (concluded on April 30), the company unveiled a remarkable 262% surge in revenue compared to the previous year. The data center segment, Nvidia’s primary income source, burgeoned by an astounding 427% year over year during the initial quarter, soaring to a remarkable $22.6 billion.
What elevates Nvidia’s feat is not just the meteoric revenue expansion. The company’s robust gross margin escalated by nearly 14 GPU) arena.
Nvidia’s competitive edge, however, emanates from its culture of innovation. Presently, Nvidia’s flagship H100 and A100 chips reign supreme. Yet, a recent offshoot, the Blackwell semiconductor cohort, has made a stunning entrance.
Drawing inspiration from Nvidia’s recent earnings call, management lauded the fervent demand for H200 and Blackwell, foreseeing supply shortages extending well into the following year.
Bolstering this optimism, Nvidia refuses to rest on its laurels. In a recent development, Nvidia’s leadership tantalized investors with a sneak peek into the forthcoming Rubin chip series. The pace at which Nvidia shepherds groundbreaking innovations stands undeniably commendable.
The saga continues as Nvidia not only refines its illustrious H100 and A100 progeny but surges forth with relentless R&D efforts, birthing an even more superior iteration: Blackwell.
If this narrative hasn’t left you in awe, consider Nvidia’s incursions into the AI-enabled robotics realm and enterprise software arena. Earlier this year, Nvidia sparked excitement by backing Figure AI, home to a humanoid robot challenging Tesla‘s Optimus.
Moreover, Nvidia has vested interests in Databricks, a premier software start-up dominating the market realm.
Image source: Getty Images.
Timing the Wave: Is Nvidia’s Stock a Viable Investment?
Embarking on the journey of investing in Nvidia elicits two distinct schools of thought. On one side, there’s apprehension that the stock has surged too swiftly, too high. Advocates of this notion argue that Nvidia’s developments such as Blackwell, Rubin, and other software and robotics ventures may already be factored into the stock price.
Counter to this skepticism, a meticulous examination of valuation metrics might hint otherwise.
The Ever-Evolving Landscape of Nvidia’s Valuation Metrics
As one delves into Nvidia’s financial foliage, a striking observation unfolds. The company’s price-to-earnings (P/E) and price-to-free cash flow multiples have undergone a fascinating metamorphosis over the past year. It’s a financial chrysalis of sorts. Do you sense the intrigue?
Despite Nvidia’s stock soaring like a magnificent eagle on a thermal updraft, its valuation multiples have descended, yes, descended, compared to a year ago. This curious occurrence transpires because Nvidia’s earnings and cash flow are racing ahead at breakneck speeds, outpacing the company’s burgeoning value. Hence, the conclusion emerges like a butterfly from a cocoon – Nvidia’s shares are now technically less dear than they were in yesteryears.
When all the puzzle pieces are laid out on the table, it’s hard to envision Nvidia lagging in the AI marathon. Furthermore, with shares appearing reasonably priced at this juncture, it seems Nvidia might just be a golden goose that one would be remiss to overlook, a veritable feast for the discerning eye.
Unveiling the Puzzling Question: Should you invest $1,000 in Nvidia right now?
Prior to taking the plunge into Nvidia’s stock pool, it would be prudent to contemplate the following:
The sage analysts from the Motley Fool Stock Advisor have unveiled a trove of the 10 best stocks they deem worthy of investment currently… and, surprisingly, Nvidia was not featured among them. These handpicked stocks are poised to yield colossal returns akin to a financial bonanza in the foreseeable future.
If you rewind the sands of time back to April 15, 2005, when Nvidia earned its coveted spot on this illustrious list, envision this hypothetical: an investment of $1,000 would have sprouted wings into a princely $774,526 empire!*
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