24/7 Insights

• Wall Street expectations for where Nvidia Corp. (NASDAQ: NVDA) stock is headed vary considerably.
• While the outlook for the AI chip maker may not be as rosy as a year ago, clearly some analysts expect the rally to continue.

For decades, the semiconductor industry was dominated by giants, while Nvidia Corp. (NASDAQ: NVDA) focused on chips for video games. More than its rivals, Nvidia has ridden the artificial intelligence (AI) tsunami of the past couple of years and has become one of America’s largest corporations. It is to the point that if the stock pulls back somewhat, the markets tremble. Should they? What goes up must come down, right? The question is where the shares may go from here, for at least the next year.

Why Invest in Nvidia?

In the past decade, Nvidia stock is up almost 25,400%. The chipmaker has become the poster child for the surge of interest in AI, and it is one of the few $3 trillion companies, along with Apple and Microsoft. The company just topped the 2024 Axios Harris Poll 100 of company reputations. The stock hit an all-time high above $140 a share and then pulled back recently. Investors have to decide whether the pullback is a great opportunity to get a stellar stock at a bit of a bargain, or if the share price is about to plateau or, worse, tumble.

Nvidia, the Company

The company engages in the design and manufacture of computer graphics processors, chipsets, and related multimedia software. Its offerings include graphics processing units (GPUs), application programming interfaces (APIs) for data science and high-performance computing, as well as system on a chip units (SoCs) for the mobile computing and automotive market. Nvidia is also a dominant supplier of artificial intelligence (AI) hardware and software.

Nvidia is based in Santa Clara, California. It was founded in 1993 by engineers from AMD, IBM, and Sun Microsystems, and it went public in early 1999. Advanced Micro Devices Inc. (NASDAQ: AMD) is a competitor. Others include Broadcom Inc. (NASDAQ: AVGO) and Intel Corp. (NASDAQ: INTC).

Nvidia effected a 10-for-1 stock split this month. The stock has had a phenomenal run in the past few years, rising 239% just in 2023. As mentioned, its market cap is more than $3 trillion. The company made a name for itself in the gaming-chip business but deftly shifted to catch the rise of the artificial intelligence tidal wave. Taiwan-born American co-founder and respected CEO Jensen Huang has become one of the richest people in the world.

Will Nvidia Ever Stop Releasing New Chips?

Nvidia, the Stock

The share price is more than 188% higher than a year ago, most of that gain since the beginning of this year. The Nasdaq is up over 30% year over year. Note that the $125.41 consensus price target is less than the 52-week high of $140.76 a share.

Out of 38 analysts who cover the stock, 21 recommend buying shares, seven of them with Strong Buy ratings. Argus, Goldman Sachs, and Jefferies recently maintained their Buy ratings. Nvidia is also popular with hedge funds, including at Vanguard, BlackRock, and State Street. Note that Huang just sold some shares, as did a couple of directors and an executive earlier in the month.

Wall Street expectations for where the stock goes in the next 52 weeks vary. While at least one analyst anticipates notable further upside, the lowest price target indicates a significant drop in the share price. Even the consensus projection is for a little downside.

Low target	$47.84	−61.8%
Mean target	$125.41	−3.4%
High target	$200.00	59.5%

Perhaps the biggest downside risk is that the AI bubble bursts spectacularly. Other risks include competitors increasingly nibbling away at Nvidia’s market share, capital spending at customers reaching a plateau or shrinking, increasing concerns about trade with China, and Nvidia stock becoming overvalued.

While the outlook may not be as rosy as a year ago, clearly some analysts expect the rally to continue, albeit more slowly. The implication is that AI is here to stay and will continue to drive the stock and the market for a year or longer. As long as AI infrastructure spending remains strong, the company should maintain its dominant position. Plus, it has been adept at shifting focus when necessary, which may give it a leg up on the next big tech trend.

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