Investing

Can NVIDIA Stock Hit $1,000 Again After its Recent Stock Split?

Joey Frenette

Published: November 21, 2024 8:34 am

Last Updated: November 21, 2024 8:38 am

Nvidia (NASDAQ:NVDA) just reported some incredibly strong third-quarter numbers that saw sales double. With AI demand still moving at full speed ahead, it seems like the AI chip giant has even fuel to extend its rally. Despite the magnitude of the earnings beat (and it was a very good beat against some fairly high analyst expectations), shares of NVDA fell more than 2% in the after-hours session.

Undoubtedly, the move seems confusing, especially since there wasn’t anything horrid served up in the quarter. Additionally, Blackwell (the next-generation family of AI chips) production is slated to ramp up in the new year, allowing the company to benefit from what could be another wave of unprecedented demand for the most capable AI chips out there. As for the H200 chip, it’s still growing at a stellar rate, so this begs the question: has NVDA stock finally run itself off the so-called expectations treadmill?

The valuation was quite rich going into the big quarterly reveal. And while we’ll have to wait and see how the Blackwell numbers stack up against the current generation, I think the NVDA stock could be in for a bit of a pause for the rest of the year as the bulls and bears duke it out.

Indeed, the bears will tout the red-hot run and lofty valuation as reasons to stay out of the name or to wait for a pullback before jumping in. Meanwhile, the bulls are sure to be euphoric over Blackwell’s potential. It’s really hard to tell which camp will be right at this juncture.

Either way, it seems like the tug-of-war between bulls and bears may just lead to a period of stagnation for some time as investors have a chance to further digest some pretty good numbers, given the circumstances.

Key Points About This Article

• Nvidia’s latest quarter was impressive but not impressive enough to spark a rally.
• A Blackwell boom needs to happen if NVDA stock makes a run for $200. As for $1,000, I think that’s off the table, given how high expectations have climbed.
• If you’re looking for some stocks with huge potential, make sure to grab a free copy of our brand-new “The Next NVIDIA” report. It features a software stock we’re confident has 10X potential.

Blackwell boom around the corner? It could be a volatile 2025 for Nvidia

In any case, there’s a lot of optimism surrounding Blackwell. And the real risk, I believe, is if it lives up to expectations but doesn’t exceed it by leaps and bounds. For now, I think a move to $1,000 is off the table. Nvidia stock goes for just north of $140 today (after the post-earnings dip), so a $1,000 target would entail a more than seven-bagger from current levels. Simply put, I think such a run is unrealistic to expect in the next five years or even the next decade.

That said, I was one of many who was caught off-guard by the 850% pop in the past two years. And if demand for Blackwell overwhelms supply and the AI boom has room to accelerate further, I suppose we could be talking stock splits once again.

Of course, I think a split may be in the cards before shares have a chance to enter four-figure territory. Indeed, a range of $300-400 seems to be a sweet spot for a 3-to-1 or 4-to-1 stock split, at least in my opinion.

Expectations seem too high. Custom AI chips pose some risks.

In any case, all eyes are on Blackwell as the new year kicks off with high expectations and many new investors looking for the AI chip giant to continue its glorious run. Looking further out, I’d watch for how Nvidia’s Magnificent Seven rivals can stack up as they launch their own new-age AI chips of their own.

If we are entering an age where AI firms can build their own custom AI chips, perhaps the best days of Nvidia will suddenly find themselves in the rearview mirror. If the big tech titans find success with their silicon endeavors, that’s a chunk of potential business that’s off the market for Nvidia.

In any case, if NVDA stock can fall after nearly doubling up on revenues, I do think it becomes profoundly difficult to please analysts whose expectations may have finally caught up to the firm’s pace.

The bottom line

In short, I don’t think NVDA stock has the gas to take it to $1,000 per share. Perhaps HSBC’s $200 per share, which is one of the highest price targets on Wall Street right now, is a more realistic one to look to on the upside. Such a target, I believe, assumes Blackwell will do well but perhaps not much more than that.

That said, if Blackwell really booms, maybe, just maybe Jensen Huang has an encore in store for shareholders.