Nvidia Corp. NVDA have been on a tear since the beginning of 2023, reflecting investor confidence in the chipmaker’s AI capabilities. Despite this upward trend, a fund manager believes the stock is attractively valued given its growth potential.
Nvidia Hits All-Time High Amid Consumer Electronics Show
Nvidia reached a new high on Tuesday, rallying 1.70% during the kickoff of the 2024 Consumer Electronics Show, closing at $531.40. The stock outperformed the Nasdaq 100 Index (up 0.17%) and the iShares Semiconductor ETF SOXX, which remained nearly flat.
Reasons for the Rally: Fund Manager’s Perspective
Gary Black, Future Fund managing partner and co-founder, said that investors are recognizing Nvidia’s continued affordability. Currently trading at 26.5 times the consensus adjusted earnings per share estimate for 2024, the company is expected to achieve a compounded annual growth rate of 28% in earnings per share between 2024 and 2028.
Analysts Project Additional Upside for Nvidia
Despite the impressive surge, analysts foresee additional upside for the stock. The average 12-month analysts’ price target is $662.39, indicating approximately 25% potential upside from the current levels, according to TipRanks.
Nvidia’s guidance for the fourth quarter predicts revenue of $20 billion, plus or minus 2%. If the company achieves this target, it is poised to report year-over-year revenue growth of over 230%. Notably, this positive outlook comes despite the U.S. ban on exporting certain high-performance chips to China, a crucial market for Nvidia.
The Santa Clara, California-based chipmaker has found success with its AI accelerator chipsets, experiencing strong demand amid the popularity of generative AI software and applications.
