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there is little doubt about it Nvidia (NASDAQ:NVDA) has become a standard-bearer for the possibilities offered by recent developments in artificial intelligence (AI). The company’s cutting-edge processors are the gold standard for use in AI models, which has significantly boosted the company’s stock price, contributing to a more than 500% jump since early 2023.
One Wall Street analyst thinks the stock price rally will continue.
Nvidia is profiting from the AI gold rush
analyst of trust financial raised Nvidia’s price target to $1,177 while maintaining a buy rating on the stock. This means the stock could rise 33% over the next 12 months or so compared to where the stock was at market close on Monday. Truist analysts said investors are underestimating NVIDIA’s leadership position in parallel computing and AI.
Analysts go further, calling Nvidia:of As an AI company, it cites continued investment and its “culture of innovation” as strategic advantages.
Strategic benefits for Nvidia
It is difficult to find fault with an analyst’s position. When Nvidia reported its fiscal fourth quarter 2024 results (ending Jan. 28), the company spent $2.46 billion on research and development (R&D) and $8.68 billion on R&D. It was the end of a year in which we spent millions of dollars. record.
Much has been said about the looming competition as rival companies race to develop better, faster, and more robust AI processors. But NVIDIA has a long track record of staying ahead of its competitors, and thanks to its continued heavy spending on research and development, that’s not likely to change anytime soon.
Additionally, NVIDIA is currently selling for 74 times trailing twelve month earnings. Wall Street expects NVIDIA to generate earnings per share (EPS) of $24.46 in 2025 and $29.82 by 2026. If analysts’ price targets are accurate, the company’s price-to-earnings ratio (P/E) will shrink to 48 times next year. This suggests that NVIDIA stock is a bargain at its current price.
For these reasons and more, Nvidia stock is a buy.
Should you invest $1,000 in Nvidia right now?
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Danny Vena holds a position at Nvidia. The Motley Fool has positions in and recommends Nvidia and Truist Financial. The Motley Fool has a disclosure policy.
NVIDIA stock has 40% upside potential, according to one Wall Street analyst.Are stocks near all-time highs a buy? Originally published by The Motley Fool
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