Last updated on September 13, 2024
Nvidia, a powerhouse in the tech industry, has seen its stock surge by over three times its value this year. Despite this impressive growth, some experts believe there’s more to come, suggesting that Nvidia’s shares might still be a great deal.
On Wednesday, Nvidia (ticker: NVDA) stock continued its upward trajectory, gaining 0.8% in early trading to reach $491.71, following its record-breaking close at $487.84 the day before.
Ben Reitzes, an analyst at Melius Research, is among those who think Nvidia’s journey is far from over. Reitzes holds a Buy rating for the stock and a price target of $730. This projection implies a remarkable 50% potential upside from Tuesday’s closing price.
As of Monday’s close, Nvidia traded at a price-to-earnings multiple of approximately 28 times its expected 2024 earnings.
Interestingly, this stands as only a modest premium compared to the 23 times average for a collection of artificial intelligence-related stocks, according to Melius.
Notably, Nvidia’s price-to-earnings ratio even reached 29 times expected 2024 earnings on Tuesday, according to FactSet data.
Reitzes stated, “On a growth-adjusted basis for CY24, Nvidia is ‘cheaper’ than Alphabet, Microsoft, and Apple.”
Amidst discussions with investors, concerns have arisen about whether the explosive growth of artificial intelligence, which has been a major driver of Nvidia’s stock, is inflating a bubble.
There are also questions about the equilibrium of supply and demand for chips, as noted by the Melius analyst.
However, Reitzes remains optimistic about Nvidia’s future. He believes that Nvidia is strategically positioning itself to justify its current valuation in the long run by establishing a robust software ecosystem and recurring cloud services atop its hardware foundation.
Additionally, Nvidia’s $25 billion share buyback program could serve as further support for the stock’s continued growth.
(Source: Barron’s)
