Nvidia in 2023 established itself as the market’s runaway favorite way to bet on the explosive growth of generative artificial intelligence (AI). And Nvidia (NVDA) stock has the outsized returns and trillion-dollar market capitalization to prove it.
Latecomers might figure that the easy money in Nvidia stock has already been made. But thanks to Nvidia’s market dominance and first-mover advantage, Wall Street believes shares in the chipmaker powering the AI revolution have plenty of upside left.
That’s remarkable considering that Nvidia stock has more than tripled in value for the year-to-date through early November.
Indeed, the maker of graphic processing units (GPUs) added roughly $800 billion in market capitalization in 2023 alone. To put that in perspective, competitor Intel (INTC), a component of the Dow Jones Industrial Average, has a market value of $160 billion. In other words, NVDA’s market value this year has expanded by the equivalent of five INTCs.
NVDA was up 211 percent for the year-to-date through November 6, pushing its market cap up to $1.12 trillion. If the idea is to buy low, then it’s perhaps reasonable to assume that it’s far too late to add Nvidia stock to your portfolio.
Most industry analysts, however, would beg to differ.
The world is suddenly awash in all sorts of AI wizardry, with more sites and tools and apps coming every day. And Nvidia’s place in this ecosystem couldn’t be more enviable. It’s churning out a new generation of advanced chips to power the data centers tasked with making the calculations that conjure all this AI magic.
Demand is so great for Nvidia’s hardware that the company’s second-quarter revenue more than doubled year-over-year to $13.5 billion. Analysts were looking for revenue of “only” $11.1 billion. For the full fiscal year, Wall Street expects the company to post revenue of more than $54 billion—a 100 percent increase over last year’s revenue of $27 billion.
The key to the investment thesis on Nvidia is that AI data centers will continue to have an almost insatiable need for the company’s products. Naturally, traders and investors could not be more elated.
That’s certainly understandable given what they see as historical precedent. As Nvidia CEO Jensen Huang said in an interview last spring, the company has been preparing for years to take advantage of the AI craze.
“I call it the iPhone moment,” Huang told The Wall Street Journal, comparing Nvidia’s position in generative AI to the way Apple’s iteration of the smartphone essentially ushered in a new era of tech. “All the technology came together and helped everybody realize what an amazing product that can be and what capabilities it can have.”
As for where the Street thinks NVDA is headed, analysts’ average price target stands at $641.37. That gives the stock implied upside of about 40 percent in the next 12 months or so.
The bottom line? Nvidia stock might be trading near record highs, but the Street says this rally is far from finished.
