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(Bloomberg) — Just 10 days into the new year, a familiar stock is back near the top of the leaderboard. That’s Nvidia Corp.
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After struggling for months to break above $500 a share, the S&P 500’s best performer last year has decisively pushed into record territory with gains of nearly 9%. The company’s market value now exceeds $1.3 trillion, less than $250 billion behind Amazon.com, the fourth most valuable company in the benchmark.
The fact that investors are still bidding against Nvidia’s stock after it more than tripled in 2023 proves how high demand expectations are for the company’s chips used in artificial intelligence computing. ing. Nvidia’s revenue rose 206% in the third quarter and is expected to rise 232% in the fourth quarter, according to data compiled by Bloomberg.
“This is a very large, fast-growing market, and they are dominating it,” said Michael Sansoterra, chief investment officer at Sylvant Capital Management. “We can expect 2024 to be another solid profitable year for NVIDIA.”
Nvidia shares rose as much as 2.3% in intraday trading on Wednesday, and are up 11% for the first time in three days.
In an interview with JPMorgan analyst Harlan Sahr on Tuesday, Nvidia Chief Financial Officer Colette Kress said the company expects to continue growing in calendar 2025 as demand for AI-related products remains strong. We reaffirmed CEO Jensen Huang’s assertion that we believe that we can.
Nvidia was hurt last year when the Biden administration tightened restrictions on chip exports to China, threatening access to a market that accounted for 21% of the chipmaker’s sales last year. Nvidia responded by creating a less capable version of its graphics chip for PCs, and promised a similar chip for data centers would arrive this year.
Earlier this week, Nvidia announced three new desktop graphics chips with additional components that make it possible to use AI more effectively on personal computers without relying on remote services accessed over the Internet. did. The Santa Clara, California-based company is expected to report earnings late next month.
Nvidia’s strong earnings, expected to reach nearly $28 billion this fiscal year, have helped cushion the company’s valuation despite a soaring stock price. Although its valuation has fallen from 55 times estimated earnings to about 27 times in May, the stock is not cheap. The forward P/E ratio for the Nasdaq 100 index is approximately 24 times.
When you compare Nvidia’s current price to its past performance, the stock looks much more expensive. On a trailing basis, Nvidia’s stock trades at about 68 times earnings, while the Nasdaq 100 stock trades at about 33 times earnings.
“I still like the stock,” said Shanna Cissell, CEO of Vanlion Capital Management, citing the stock’s valuation relative to its earnings growth. “I think that will keep the momentum going.”
Even Nvidia’s biggest fans don’t expect the stock to repeat its 2023 performance. Wall Street’s average price target is about $650, implying an upside of about 20% from current levels, making it one of the richest margins among the largest U.S. technology companies.
“If our benchmark for stock performance is 200% every year, we really need to reassess our expectations,” Cissell said, adding that he expects Nvidia to outperform the broader market again this year. I added my perspective. “For me, it’s still a stock worth owning.”
Today’s technology chart
Coinbase Global, a leading cryptocurrency stock, has significantly outperformed analysts’ price targets ahead of the U.S. Securities and Exchange Commission’s long-awaited decision on whether to approve a spot Bitcoin exchange-traded fund. Ta. This rally is so strong that the average return potential based on analyst targets suggests the stock will decline by more than 20% over the next 12 months.
top technology news
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A highly anticipated decision by the U.S. Securities and Exchange Commission on whether to approve a Spot Bitcoin exchange-traded fund quickly turned into a major cybersecurity incident on Tuesday.
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Taiwan Semiconductor Manufacturing Co.’s fourth-quarter sales exceeded expectations for a decline as demand from artificial intelligence companies offset sluggish sales of chips for smartphones and laptops.
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ByteDance Ltd.’s TikTok became the first app to surpass $10 billion in cumulative consumer spending, according to data.ai’s latest annual report. It is said to have set a new record.
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Global semiconductor sales rose for the first time in more than a year on the latest signs that demand is starting to recover on the back of emerging technologies such as artificial intelligence.
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Apple has returned to the annual list of the 100 Best Places to Work, after dropping last year, but technology companies were less represented as the industry was hit by layoffs.
Proceeds are scheduled to be paid on Wednesday
–With assistance from Ian King, Thyagaraju Adinarayan, and Rheaa Rao.
(Updates overall inventory trends.)
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