In a significant milestone, Nvidia’s shares soared to an all-time high on Tuesday, reflecting the growing investor enthusiasm for the company’s prowess in harnessing artificial intelligence (AI). The stock opened at its highest level yet, marking a remarkable achievement for the company as it solidifies its position as a trillion-dollar enterprise. Investors are capitalizing on the ongoing AI boom, resulting in stock gains that outpace those of its competitors.
The surge in Nvidia’s stock price saw an immediate 3% jump to reach $481.87, following an 8% increase on the previous day. The company’s stock momentum has been building consistently, surpassing its previous record high of $480.88.
This remarkable rally is unfolding just ahead of Nvidia’s earnings report for the last quarter. Analysts are predicting a remarkable fourfold increase in the company’s profits year-over-year, largely attributed to the anticipated doubling of sales within its AI sector. These insights are drawn from FactSet data.
Nvidia has witnessed a staggering 315% surge in its shares since October of the previous year. Notably, no other company listed on the S&P 500 has achieved a comparable gain of more than 128% within the same timeframe.
While Nvidia’s performance is impressive, it’s worth noting that several other companies with direct or partial exposure to AI have significantly outperformed the broader market this year. Notable examples include Meta, Tesla, Palo Alto Networks, Advanced Micro Devices, Amazon, Salesforce, Adobe, and Arista Networks, all of which are among the top 20 performers on the S&P index for 2023. Their gains have easily surpassed the median 3% year-to-date return for stocks listed on the index.
Despite the remarkable surge, market experts anticipate that Nvidia’s stock still holds potential for further growth. According to FactSet, the average price target among analysts stands at $538, implying a 12% upside.
Prominent industry analyst Hans Mosesmann from Rosenblatt has set an even higher target of $800 for Nvidia’s stock, the highest on Wall Street. Mosesmann emphasizes that the company stands apart in its provision of software and AI solutions, attributing Nvidia’s proper valuation to be as high as $2 trillion. This would position the company as the fourth-largest globally, trailing only Apple, Microsoft, and Saudi Aramco.
Nvidia’s meteoric rise is underscored by the remarkable increase in its market capitalization over the past 10 months, totaling a staggering $890 billion. This astounding figure surpasses the combined valuation of prominent entities like JPMorgan Chase, the largest bank in the U.S., and brick-and-mortar retail giant Walmart.
Despite the company’s robust sales growth, Nvidia’s surging stock value is accompanied by historically high relative valuation levels. The price-to-earnings ratio, which gauges share price in relation to trailing 12-month earnings, has surged from around 50 to nearly 250 since the previous fall. This stands in stark contrast to the median P/E ratio of about 25 for all companies listed on the S&P.
Nvidia’s visionary CEO, Jensen Huang, has earned the moniker of the “godfather of AI,” as described by Wedbush analyst Dan Ives. Huang’s net worth has witnessed a remarkable surge from approximately $14 billion to $43 billion within this year alone, according to calculations by Forbes. This spectacular rise underscores the profound impact of Nvidia’s AI-focused endeavors on both its market value and its leadership’s personal wealth.