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[1]
Nvidia's Stock Is Up 170% to Start 2024. Could It Double to Finish the Year?
In 2023, there were few better stocks to own than Nvidia (NASDAQ: NVDA). The stock rose nearly 240%, and many investors (including myself) concluded that 2024 wouldn't be a repeat of the same. But we were wrong. On the heels of an incredible 2023 performance, Nvidia more than doubled in 2024, as the stock has risen 170% so far. That's an amazing run that is incomparable when you consider Nvidia's size. But after such a strong year, could Nvidia double again from this point? After all, it proved investors wrong multiple times. Artificial intelligence is driving Nvidia's stock higher Nvidia's rise has been tied to the artificial intelligence (AI) gold rush. To train AI models, you need some serious computing power. Central processing units (CPU) inside PCs don't cut it because it can only process one calculation at a time. In place of CPUs, graphics processing units (GPUs) are used. GPUs can perform multiple calculations in parallel, which is key for arduous workloads. Additionally, GPUs can be connected to create incredibly powerful computers that can crank out state-of-the-art AI models in no time. With many companies building servers outfitted with thousands of GPUs, Nvidia stands to benefit. While there are a few competitors in the GPU market, none compare to Nvidia. As a result, Nvidia has an iron grip on this market, as anyone building a supercomputer to train AI models is likely an Nvidia customer. This has caused its sales to skyrocket, with Nvidia posting multiple quarters of revenue tripling. NVDA Revenue (TTM) data by YCharts. TTM = trailing 12 months. YoY = year over year. It also achieved record profitability alongside its revenue growth for a few reasons. First, it can charge what it wants with a best-in-class product that is light-years ahead of the competition. Second, it already has the production capacity to produce these GPUs. And finally, it doesn't need to to spend on marketing because the demand is already in place. These factors combine to give Nvidia the best chance at peak margins, which it posted recently. NVDA Gross Profit Margin data by YCharts. As a result of Nvidia's success, investors are been willing to pay a substantial premium to own the stock. It trades at 46 times forward earnings, which indicates investors are willing to pay up for Nvidia's future growth, which has already been penciled in. All this information was known entering 2024, yet the market still bid up the stock throughout the year. With that in mind, could Nvidia double by the end of 2024? If the stock doubled, many records would be broken It would be unreal for Nvidia to double by the end of 2024. While there's no doubt Nvidia's business will succeed throughout 2024 and beyond, there are questions about the stock. Currently, Nvidia is valued at $3.1 trillion. If it doubles, that means it would be worth $6.2 trillion. No company has ever been worth $4 trillion, so many records would need to be shattered between now and the end of the year for this to occur. Furthermore, the stock's valuation would have to practically double as well. Although Nvidia has steadily blown expectations out of the water, aggressive growth is still penciled into the stock, and these expectations won't decrease. So, for Nvidia to double, it would likely have to trade at more than 80 times forward earnings. Few fully profitable companies have sustainably traded above 40 times earnings in the history of the stock market, let alone 80. As a result, I don't think expecting the stock to double is feasible. While Nvidia has been a superstar over the past year and a half, I don't think it's wise for investors to expect the stock to double anytime soon. Too many barriers are in the way of the numbers that would need to be baked into the stock to achieve a double by the end of 2024. The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now... and Nvidia wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $826,672!* Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*. Keithen Drury has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy. The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
[2]
Nvidia's Stock Is Up 170% to Start 2024. Could It Double to Finish the Year?
In 2023, there were few better stocks to own than Nvidia (NVDA -5.57%). The stock rose nearly 240%, and many investors (including myself) concluded that 2024 wouldn't be a repeat of the same. But we were wrong. On the heels of an incredible 2023 performance, Nvidia more than doubled in 2024, as the stock has risen 170% so far. That's an amazing run that is incomparable when you consider Nvidia's size. But after such a strong year, could Nvidia double again from this point? After all, it proved investors wrong multiple times. Artificial intelligence is driving Nvidia's stock higher Nvidia's rise has been tied to the artificial intelligence (AI) gold rush. To train AI models, you need some serious computing power. Central processing units (CPU) inside PCs don't cut it because it can only process one calculation at a time. In place of CPUs, graphics processing units (GPUs) are used. GPUs can perform multiple calculations in parallel, which is key for arduous workloads. Additionally, GPUs can be connected to create incredibly powerful computers that can crank out state-of-the-art AI models in no time. With many companies building servers outfitted with thousands of GPUs, Nvidia stands to benefit. While there are a few competitors in the GPU market, none compare to Nvidia. As a result, Nvidia has an iron grip on this market, as anyone building a supercomputer to train AI models is likely an Nvidia customer. This has caused its sales to skyrocket, with Nvidia posting multiple quarters of revenue tripling. NVDA Revenue (TTM) data by YCharts. TTM = trailing 12 months. YoY = year over year. It also achieved record profitability alongside its revenue growth for a few reasons. First, it can charge what it wants with a best-in-class product that is light-years ahead of the competition. Second, it already has the production capacity to produce these GPUs. And finally, it doesn't need to to spend on marketing because the demand is already in place. These factors combine to give Nvidia the best chance at peak margins, which it posted recently. NVDA Gross Profit Margin data by YCharts. As a result of Nvidia's success, investors are been willing to pay a substantial premium to own the stock. It trades at 46 times forward earnings, which indicates investors are willing to pay up for Nvidia's future growth, which has already been penciled in. All this information was known entering 2024, yet the market still bid up the stock throughout the year. With that in mind, could Nvidia double by the end of 2024? If the stock doubled, many records would be broken It would be unreal for Nvidia to double by the end of 2024. While there's no doubt Nvidia's business will succeed throughout 2024 and beyond, there are questions about the stock. Currently, Nvidia is valued at $3.1 trillion. If it doubles, that means it would be worth $6.2 trillion. No company has ever been worth $4 trillion, so many records would need to be shattered between now and the end of the year for this to occur. Furthermore, the stock's valuation would have to practically double as well. Although Nvidia has steadily blown expectations out of the water, aggressive growth is still penciled into the stock, and these expectations won't decrease. So, for Nvidia to double, it would likely have to trade at more than 80 times forward earnings. Few fully profitable companies have sustainably traded above 40 times earnings in the history of the stock market, let alone 80. As a result, I don't think expecting the stock to double is feasible. While Nvidia has been a superstar over the past year and a half, I don't think it's wise for investors to expect the stock to double anytime soon. Too many barriers are in the way of the numbers that would need to be baked into the stock to achieve a double by the end of 2024.
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NVIDIA's stock has experienced a remarkable 170% surge in the first half of 2024, driven by AI chip demand. Analysts are now speculating whether the tech giant's shares could double by year-end.
NVIDIA Corporation, the leading graphics processing unit (GPU) manufacturer, has witnessed an extraordinary start to 2024. The company's stock has skyrocketed by an impressive 170% in the first half of the year, outpacing many of its tech peers and leaving investors wondering about its future trajectory 1.
The primary catalyst for NVIDIA's remarkable stock performance has been the surging demand for artificial intelligence (AI) chips. As businesses across various sectors rush to implement AI technologies, NVIDIA's advanced GPUs have become the go-to choice for powering these complex systems 2.
Wall Street analysts are optimistic about NVIDIA's future, projecting substantial growth in the company's financials. For the fiscal year 2025 (which aligns with calendar year 2024), experts anticipate NVIDIA's revenue to reach $90.8 billion, marking a significant 57% increase year-over-year. The company's earnings per share are expected to hit $19.10, representing a remarkable 69% growth 1.
Despite the already impressive gains, some analysts believe NVIDIA's stock has room for further growth. The most optimistic price targets suggest the stock could potentially double from its current levels by the end of 2024. However, it's important to note that such projections are speculative and subject to market conditions 2.
While the outlook for NVIDIA appears promising, investors should be aware of potential challenges. The tech industry is known for its volatility, and NVIDIA's high valuation could make it susceptible to market fluctuations. Additionally, increased competition in the AI chip market and potential regulatory hurdles could impact the company's growth trajectory 1.
Despite short-term uncertainties, many analysts remain bullish on NVIDIA's long-term prospects. The company's strong position in the AI chip market, coupled with its continuous innovation in GPU technology, positions it well for sustained growth in the evolving tech landscape 2.
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