Nvidia's Stock Split and Market Performance: A Comprehensive Analysis

Is It Too Late to Buy Nvidia Stock After Its 10-for-1 Split? | The Motley Fool

Artificial intelligence (AI) is one of the hottest industries for investors right now. Semiconductor darling and data center specialist Nvidia (NVDA 1.44%) is considered by many on Wall Street to be a lucrative opportunity for AI enthusiasts. With shares of Nvidia up over 170% so far in 2024, some investors may think they've missed the boat. Let's take a look at what is going on at Nvidia, and assess if now is still a reasonable time to scoop up some shares. 2023 marked a new age for the technology industry. Behemoths such as Microsoft, Alphabet, and Amazon all made a series of splashy investments revolving around AI applications. Some of the bigger investments these tech giants made were buying AI-powered semiconductor chips, as well as ramping up data center services. Considering Nvidia has an estimated 80% share of the AI chip market, these moves by big tech undoubtedly served as a big boost to the company. The strong momentum from last year's AI euphoria carried into 2024, and Nvidia investors haven't stopped buying up the stock. To put this into context, shares of Nvidia have increased almost 800% since January 2023. This unprecedented run briefly catapulted Nvidia over Microsoft as the world's most valuable company by market cap. Moreover, as shares continued to eclipse new heights, Nvidia's management finally decided to implement a 10-for-1 stock split last month. What's incredible is that much of the narrative surrounding Nvidia deals with the company's chip business. Indeed, its H100 and A100 graphics processing units (GPUs) are used by companies all around the world -- including Meta Platforms and Tesla. Moreover, Nvidia is continuing to lead the innovation front in the GPU realm with the introduction of its new Blackwell and Rubin chips. With that said, it's important to understand that Nvidia makes money from other products and services as well. In fact, one of its lesser-known growth opportunities is outside of hardware. Nvidia's compute unified device architecture (CUDA) software platform is already proving to be a lucrative business. Essentially, CUDA is a programming tool that is meant to be used in parallel with Nvidia's GPUs. So, in a sense, the company is attempting to build out an end-to-end AI ecosystem encompassing both hardware and software. One of the big reasons CUDA is going to be important for Nvidia is due to competition in the chip space. Companies such as AMD, Intel, and even Amazon and Meta are all working on competing GPUs to that of Nvidia. Although it's too early to get a sense of how these competing products will impact Nvidia, I think it's reasonably safe to say that the company will eventually lose some of its pricing power in the chip space. As a result, Nvidia's profit margins are likely to take a hit at some point in the future. However, some of this margin deterioration should be mitigated so long as CUDA continues to thrive. The reason is because software products tend to carry much higher margins than hardware. The chart below illustrates Nvidia's price-to-earnings (P/E) and price-to-free-cash-flow (P/FCF) multiples over the last 12 months. While a P/E of 75.9 and a P/FCF of 82.2 may look pricey, there are a couple of ideas to explore here. First, both Nvidia's P/E and P/FCF multiples are lower than they were a year ago. In other words, despite the rapid ascent of the stock price, Nvidia's earnings and cash flow are accelerating at a faster rate -- therefore, Nvidia stock is technically less expensive today than it was 12 months ago. Moreover, Nvidia's commanding lead in the chip space and its under-the-radar software services should be analyzed further. The company is an investor in Databricks, one of the most valuable AI start-ups in the world. Nvidia is also an investor in Figure AI -- a developer of humanoid robotics. I do not think that opportunities in robotics and AI software are priced into Nvidia stock yet. I think many of these applications are currently overshadowed by the performance of the chip business, and many investors are discounting the potential Nvidia has in other areas in the AI arena. Long-term investors have an opportunity to gain exposure to many different aspects of AI simply through Nvidia. Despite the meteoric rise in share price, the valuation analysis above, as well as some of the other growth opportunities explored make a compelling case that Nvidia stock is a good buy right now and significant upside could very much be in store.

Is It Too Late to Buy Nvidia Stock After Its 10-for-1 Split?

Artificial intelligence (AI) is one of the hottest industries for investors right now. Semiconductor darling and data center specialist Nvidia (NASDAQ: NVDA) is considered by many on Wall Street to be a lucrative opportunity for AI enthusiasts. With shares of Nvidia up over 170% so far in 2024, some investors may think they've missed the boat. Let's take a look at what is going on at Nvidia, and assess if now is still a reasonable time to scoop up some shares. Some of the bigger investments these tech giants made were buying AI-powered semiconductor chips, as well as ramping up data center services. Considering Nvidia has an estimated 80% share of the AI chip market, these moves by big tech undoubtedly served as a big boost to the company. The strong momentum from last year's AI euphoria carried into 2024, and Nvidia investors haven't stopped buying up the stock. To put this into context, shares of Nvidia have increased almost 800% since January 2023. This unprecedented run briefly catapulted Nvidia over Microsoft as the world's most valuable company by market cap. Moreover, as shares continued to eclipse new heights, Nvidia's management finally decided to implement a 10-for-1 stock split last month. What's incredible is that much of the narrative surrounding Nvidia deals with the company's chip business. Indeed, its H100 and A100 graphics processing units (GPUs) are used by companies all around the world -- including Meta Platforms and Tesla. Moreover, Nvidia is continuing to lead the innovation front in the GPU realm with the introduction of its new Blackwell and Rubin chips. With that said, it's important to understand that Nvidia makes money from other products and services as well. In fact, one of its lesser-known growth opportunities is outside of hardware. Nvidia's compute unified device architecture (CUDA) software platform is already proving to be a lucrative business. Essentially, CUDA is a programming tool that is meant to be used in parallel with Nvidia's GPUs. So, in a sense, the company is attempting to build out an end-to-end AI ecosystem encompassing both hardware and software. One of the big reasons CUDA is going to be important for Nvidia is due to competition in the chip space. Companies such as AMD, Intel, and even Amazon and Meta are all working on competing GPUs to that of Nvidia. Although it's too early to get a sense of how these competing products will impact Nvidia, I think it's reasonably safe to say that the company will eventually lose some of its pricing power in the chip space. As a result, Nvidia's profit margins are likely to take a hit at some point in the future. However, some of this margin deterioration should be mitigated so long as CUDA continues to thrive. The reason is because software products tend to carry much higher margins than hardware. Is now a good time to invest in Nvidia stock? The chart below illustrates Nvidia's price-to-earnings (P/E) and price-to-free-cash-flow (P/FCF) multiples over the last 12 months. While a P/E of 75.9 and a P/FCF of 82.2 may look pricey, there are a couple of ideas to explore here. NVDA PE Ratio data by YCharts First, both Nvidia's P/E and P/FCF multiples are lower than they were a year ago. In other words, despite the rapid ascent of the stock price, Nvidia's earnings and cash flow are accelerating at a faster rate -- therefore, Nvidia stock is technically less expensive today than it was 12 months ago. Moreover, Nvidia's commanding lead in the chip space and its under-the-radar software services should be analyzed further. The company is an investor in Databricks, one of the most valuable AI start-ups in the world. Nvidia is also an investor in Figure AI -- a developer of humanoid robotics. I do not think that opportunities in robotics and AI software are priced into Nvidia stock yet. I think many of these applications are currently overshadowed by the performance of the chip business, and many investors are discounting the potential Nvidia has in other areas in the AI arena. Long-term investors have an opportunity to gain exposure to many different aspects of AI simply through Nvidia. Despite the meteoric rise in share price, the valuation analysis above, as well as some of the other growth opportunities explored make a compelling case that Nvidia stock is a good buy right now and significant upside could very much be in store. 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 $791,929!* 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*. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Adam Spatacco has positions in Alphabet, Amazon, Meta Platforms, Microsoft, Nvidia, and Tesla. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Amazon, Meta Platforms, Microsoft, Nvidia, and Tesla. The Motley Fool recommends Intel and recommends the following options: long January 2025 $45 calls on Intel, long January 2026 $395 calls on Microsoft, short August 2024 $35 calls on Intel, and short January 2026 $405 calls on Microsoft. 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.

Is It Finally Time to Sell Nvidia Stock?

Nvidia (NASDAQ: NVDA) has been one of the hottest stocks on the market since the beginning of 2023, clocking stunning gains of 799% and outpacing the S&P 500 index's 45% jump by a massive margin. This was due to the impressive growth in the company's revenue and earnings due to the healthy demand for its artificial intelligence (AI) chips. This phenomenal surge is why Nvidia is now trading at a rich valuation. Its price-to-earnings (P/E) ratio of 77 is well above the Nasdaq 100 index's multiple of 32 (using the index as a proxy for tech stocks). This is why some Wall Street analysts are now concerned about the company's ability to sustain its red-hot rally. New Street Research recently downgraded Nvidia from buy to neutral, citing the stock's valuation. Analyst Pierre Ferragu has a one-year price target of $135 on the stock, which points toward a very limited upside from current levels. Meanwhile, the stock's median one-year price target of $130, as per 62 analysts covering the stock, also indicates that it's unlikely to deliver more gains. Does this mean it's now time for investors to book their profits and sell Nvidia stock? Can Nvidia continue to outperform the market's expectations? New Street Research believes that Nvidia stock could deliver more gains only if there's a sizable increase in its outlook beyond 2025. It's analysts aren't convinced that this scenario is going to materialize just yet. The combination of Nvidia's rich valuation and concerns about sustaining its terrific growth next year seems to have dented confidence in the company. But a closer look at the potential growth of the AI chip market, which Nvidia dominates, and the company's robust pricing power suggest it could indeed sustain healthy growth in 2025 and beyond. Market research firm TechNavio is forecasting the AI chip market will see an incredible annual growth rate of 68% through 2028, adding $390 billion in incremental revenue. With an estimated 94% share of this market, Nvidia remains in a terrific position to capitalize on this opportunity. Of course, there's competition from the likes of AMD and Intel in the AI chip market, but Nvidia is expected to remain the dominant player. For example, Citigroup expects Nvidia to control between 90% and 95% of the AI chip market in 2024 and 2025. One reason that may be the case is because of the Nvidia's ability to command a technology lead over rivals. Its next-generation Blackwell AI chips are already in full production, as management said on the latest earnings conference call. It also pointed out that the demand for Blackwell is "well ahead of supply, and we expect demand may exceed supply well into next year." It's worth noting that Nvidia's Blackwell chips are manufactured on a 4-nanometer (nm) node. For comparison, AMD's flagship MI300X AI accelerator is reportedly manufactured on a 5nm and 6nm process. The smaller process node allows Nvidia to pack in more transistors, making its chips more powerful and energy efficient. More specifically, the Blackwell chips pack 208 billion transistors, as compared to 153 billion transistors on the MI300X. This explains why the demand for Nvidia's new processors exceeds supply. Moreover, even if Nvidia were to lose ground in the AI chip market in the future, its data center revenue is expected to multiply significantly, thanks to the massive addressable opportunity present in this space. All this explains why Nvidia's revenue estimates have been heading higher consistently of late. NVDA Revenue Estimates for Current Fiscal Year data by YCharts. Moreover, analysts are estimating Nvidia's earnings to increase at an annual rate of 43% for the next five years. Based on its earnings of $1.19 per share in fiscal 2024, the company's bottom line could jump to $7.11 after five years. Multiply that with the Nasdaq 100's forward earnings multiple of 29.5 and Nvidia's stock price could increase to $210, implying a 60% upside from current levels. It may not be a good idea to sell shares of Nvidia right now, and a closer look at the company's valuation indicates it isn't really expensive when considering the growth that the stock is expected to deliver. The chipmaker's valuation is justified While it's true that Nvidia stock is expensive right now when compared to the broader index, it would be wrong to take a look at its valuation in isolation. The company delivered a 262% year-over-year increase in revenue in fiscal Q1 to a record $26 billion, along with a 461% increase in adjusted earnings. For comparison, the S&P 500 index's earnings grew an estimated 7.1% in the first quarter of the calendar year. As it turns out, Nvidia's rapid earnings growth is why its P/E has dropped in the past year, signifying that it's been able to justify the premium valuation. NVDA PE Ratio data by YCharts. The company's forward P/E ratio of 48 isn't very expensive considering that the U.S. technology sector has a similar earnings multiple. So selling Nvidia stock based on its valuation doesn't look like a good idea. The terrific growth that it's been delivering and its ability to sustain it could result in more upside in the long run. Don't miss this second chance at a potentially lucrative opportunity Ever feel like you missed the boat in buying the most successful stocks? Then you'll want to hear this. On rare occasions, our expert team of analysts issues a "Double Down" stock recommendation for companies that they think are about to pop. If you're worried you've already missed your chance to invest, now is the best time to buy before it's too late. And the numbers speak for themselves: Right now, we're issuing "Double Down" alerts for three incredible companies, and there may not be another chance like this anytime soon. Citigroup is an advertising partner of The Ascent, a Motley Fool company. Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices and Nvidia. The Motley Fool recommends Intel and recommends the following options: long January 2025 $45 calls on Intel and short August 2024 $35 calls on Intel. 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.

Is It Finally Time to Sell Nvidia Stock? | The Motley Fool

Should investors consider booking profits following this recent analyst action? Nvidia (NVDA 1.44%) has been one of the hottest stocks on the market since the beginning of 2023, clocking stunning gains of 799% and outpacing the S&P 500 index's 45% jump by a massive margin. This was due to the impressive growth in the company's revenue and earnings due to the healthy demand for its artificial intelligence (AI) chips. This phenomenal surge is why Nvidia is now trading at a rich valuation. Its price-to-earnings (P/E) ratio of 77 is well above the Nasdaq 100 index's multiple of 32 (using the index as a proxy for tech stocks). This is why some Wall Street analysts are now concerned about the company's ability to sustain its red-hot rally. New Street Research recently downgraded Nvidia from buy to neutral, citing the stock's valuation. Analyst Pierre Ferragu has a one-year price target of $135 on the stock, which points toward a very limited upside from current levels. Meanwhile, the stock's median one-year price target of $130, as per 62 analysts covering the stock, also indicates that it's unlikely to deliver more gains. Does this mean it's now time for investors to book their profits and sell Nvidia stock? New Street Research believes that Nvidia stock could deliver more gains only if there's a sizable increase in its outlook beyond 2025. It's analysts aren't convinced that this scenario is going to materialize just yet. The combination of Nvidia's rich valuation and concerns about sustaining its terrific growth next year seems to have dented confidence in the company. But a closer look at the potential growth of the AI chip market, which Nvidia dominates, and the company's robust pricing power suggest it could indeed sustain healthy growth in 2025 and beyond. Market research firm TechNavio is forecasting the AI chip market will see an incredible annual growth rate of 68% through 2028, adding $390 billion in incremental revenue. With an estimated 94% share of this market, Nvidia remains in a terrific position to capitalize on this opportunity. Of course, there's competition from the likes of AMD and Intel in the AI chip market, but Nvidia is expected to remain the dominant player. For example, Citigroup expects Nvidia to control between 90% and 95% of the AI chip market in 2024 and 2025. One reason that may be the case is because of the Nvidia's ability to command a technology lead over rivals. Its next-generation Blackwell AI chips are already in full production, as management said on the latest earnings conference call. It also pointed out that the demand for Blackwell is "well ahead of supply, and we expect demand may exceed supply well into next year." It's worth noting that Nvidia's Blackwell chips are manufactured on a 4-nanometer (nm) node. For comparison, AMD's flagship MI300X AI accelerator is reportedly manufactured on a 5nm and 6nm process. The smaller process node allows Nvidia to pack in more transistors, making its chips more powerful and energy efficient. More specifically, the Blackwell chips pack 208 billion transistors, as compared to 153 billion transistors on the MI300X. This explains why the demand for Nvidia's new processors exceeds supply. Moreover, even if Nvidia were to lose ground in the AI chip market in the future, its data center revenue is expected to multiply significantly, thanks to the massive addressable opportunity present in this space. All this explains why Nvidia's revenue estimates have been heading higher consistently of late. Moreover, analysts are estimating Nvidia's earnings to increase at an annual rate of 43% for the next five years. Based on its earnings of $1.19 per share in fiscal 2024, the company's bottom line could jump to $7.11 after five years. Multiply that with the Nasdaq 100's forward earnings multiple of 29.5 and Nvidia's stock price could increase to $210, implying a 60% upside from current levels. It may not be a good idea to sell shares of Nvidia right now, and a closer look at the company's valuation indicates it isn't really expensive when considering the growth that the stock is expected to deliver. While it's true that Nvidia stock is expensive right now when compared to the broader index, it would be wrong to take a look at its valuation in isolation. The company delivered a 262% year-over-year increase in revenue in fiscal Q1 to a record $26 billion, along with a 461% increase in adjusted earnings. For comparison, the S&P 500 index's earnings grew an estimated 7.1% in the first quarter of the calendar year. As it turns out, Nvidia's rapid earnings growth is why its P/E has dropped in the past year, signifying that it's been able to justify the premium valuation. The company's forward P/E ratio of 48 isn't very expensive considering that the U.S. technology sector has a similar earnings multiple. So selling Nvidia stock based on its valuation doesn't look like a good idea. The terrific growth that it's been delivering and its ability to sustain it could result in more upside in the long run.

Nvidia Highlights Lucrative Returns For Cloud Providers Using Nvidia GPUs - NVIDIA (NASDAQ:NVDA)

Nvidia's AI advancements position it for significant growth. Nvidia Corp NVDA stock is on a roll thanks to the artificial intelligence frenzy. In June 2024, Nvidia briefly became the world's most valuable company, reaching a valuation of $3.34 trillion. During the Bank of America Securities 2024 Global Technology Conference, Ian Buck, Vice President and General Manager of Nvidia's hyperscale and HPC business, highlighted the financial benefits of investing in GPUs, the First Post reports. Also Read: Taiwan Semiconductor Joins The Trillion Dollar Club, Surpassing Tesla: Report He mentioned that cloud providers see substantial returns on investment with Nvidia's GPUs. Over four years, providers can generate five dollars for every dollar spent on GPUs. Buck pointed out that inferencing tasks are even more profitable, with a seven-dollar return for each dollar invested in the same period, and this figure is on the rise. Nvidia is actively addressing the growing demand for AI inference with products like Nvidia Inference Microservices (NIMs), which support popular AI models such as Llama, Mistral, and Gemma. The company is also focusing on its new Blackwell GPU. Buck emphasized the necessity of early collaboration, noting the significant planning required for data center construction projects. Investors can gain exposure to Nvidia through Vanguard Information Tech ETF VGT and iShares S&P 500 Growth ETF IVW. Price Action: NVDA shares traded higher by 2.35% at $130.39 at the last check on Friday. Also Read: AMD Challenges Nvidia With Strategic $665M Purchase Of Finnish AI Lab Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. Photo via Shutterstock Market News and Data brought to you by Benzinga APIs

Nvidia's Blackwell Launch Could Be a Huge Catalyst for Artificial Intelligence (AI) Stock Investors

Jose Najarro has positions in Advanced Micro Devices and Nvidia. The Motley Fool has positions in and recommends Advanced Micro Devices, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy. Jose Najarro is an affiliate of The Motley Fool and may be compensated for promoting its services. If you choose to subscribe through their link, they will earn some extra money that supports their channel. Their opinions remain their own and are unaffected by The Motley Fool.

'Nvidia Is Slowly Becoming The IBM Of The AI Era' Says Former AMD And Tesla Engineer. Here's The Problem With That Comparison

Jim Keller, a well-known engineer who's worked at AMD and Tesla and now leads the AI company Tenstorrent, recently said something interesting on the DemystifySci podcast. He thinks Nvidia is becoming like IBM back in the day but in the AI world. While this shows how powerful Nvidia is right now in AI hardware, it also raises some concerns. Don't Miss: Amid the ongoing EV revolution, previously overlooked low-income communities now harbor a huge investment opportunity at just $500. Mark Cuban believes "the next wave of revenue generation is around real estate and entertainment" -- this new real estate fund allows you to get started with low minimum investment. Nvidia's smart move to focus on AI early has paid off big time -- its earnings were over $26 billion in the first quarter of 2024. It's also one of the top three companies in the world by market valuation, breathing down the necks of Microsoft and Apple. The company is now a major player in the AI hardware market, with its powerful GPUs used by tech giants like Microsoft, OpenAI, and Meta. It seems that everyone is on the Nvidia hype train, as CEO Jensen Huang calls AI the "next industrial revolution," with Nvidia at the center. Keller, an extremely accomplished engineer and entrepreneur, knows what he's talking about. However, he might not realize just how unfortunate his comment that "Nvidia is slowly becoming the IBM of the AI era" is. In the early 1980s, IBM was huge in the personal computer market. Their PCs were everywhere, and saying "PC" often meant you were talking about an IBM machine. But, IBM's reign didn't last long because of a few key mistakes and growing competition. Trending: Sun Belt's booming real estate market prepares for millions of new inhabitants -- Here's how to find the region's best deals! IBM's strategy of using an open architecture helped it dominate the market initially, but it also made it easy for other companies to make IBM-compatible PCs. These competitors sold similar products at lower prices, which ate into IBM's market share. The partnership between IBM and Microsoft also backfired as Bill Gates' company retained the rights to sell its operating system (MS-DOS) to other companies, paving the way for the rise of Microsoft Windows. As PC Gamer reports, as Windows became the dominant operating system, PCs became more associated with Microsoft than IBM. IBM's slow adaptation to market changes and sticking to old business models allowed competitors to gain a foothold. By the 1990s, IBM's PC business was struggling, and in 2005, IBM sold its PC division to Lenovo, leaving the personal computer market. See Also: Many are surprised that they are eligible for a tax reduction on their home, with just a few seconds you can see if you can save in 3 minutes or less. Nvidia could run into similar problems. As more companies start making AI hardware, Nvidia's GPUs might get cheaper because of the competition. Technology moves fast, so today's best chips can become outdated quickly. As Nvidia keeps growing, it could face more competition and rules to follow, just like IBM did. In addition, there's the $600 billion AI question. As Analyst David Chan from Sequoia writes, there's a big gap between the money being spent on AI infrastructure and the revenue AI is actually bringing in. AI companies need to make about $600 billion a year to earn enough to cover these huge investments. Chan said the gap was "only" $200 billion in September 2023. Even though Nvidia is making a lot of money, the rest of the AI market isn't growing fast enough. Keller's comparison to IBM is both a compliment and a warning because Nvidia's success now doesn't guarantee its future. After all, the tech world is full of once market-leading companies that didn't keep up with changes. Read Next: This Jeff Bezos-backed startup will allow you to become a landlord in just 10 minutes, and you only need $100. Will the surge continue or decline on real estate prices? People are finding out about risk-free real estate investing with just $100 Market News and Data brought to you by Benzinga APIs