Nvidia’s stock(NVDA) momentarily became one of the $2 trillion businesses following the positive reception to its earnings release from last week. With a recent surge above $800, Nvidia is now the most expensive “Magnificent 7)” stock when considering only absolute value.
Now that Nvidia’s stock has experienced a rapid surge, it has a genuine possibility of overtaking all other American companies in terms of revenue. With Nvidia’s stock market valuation surpassing that of both Amazon (AMZN) and Alphabet (GOOG), the only companies with a higher market cap at the moment are Microsoft (MSFT) and Apple (AAPL). Should Nvidia become the largest
American corporation soon, and why is its stock price so high?
Nvidia’s stock(NVDA) momentarily became one of the $2 trillion businesses following the positive reception to its earnings release from last week. The price of Nvidia’s stock has risen past $800, making it the most costly “Magnificent 7)” stock in total. Nvidia now has a genuine possibility of overtaking all other American companies thanks to the spectacular surge in its shares. Now that Nvidia’s stock has outgrown both Amazon (AMZN) and Alphabet (GOOG) in size, the only companies with a market valuation bigger than Nvidia’s stock are Microsoft (MSFT) and Apple (AAPL). Is Nvidia poised to overtake all other American companies in terms of market capitalization?
Why Is The Stock of Nvidia So High?
The primary driver of Nvidia’s stock’s extreme price increase over the past year has been artificial intelligence (AI)-driven market movement. In addition to rising 240% in 2023, the stock has increased 61% this year. Over the past three years, the shares have increased 481%, putting NVDA beyond its 2021 trading levels when it split four for one. Since the start of 2023, Nvidia’s stock has had significant growth, mostly attributable to its status as the leading provider of AI technology. Nvidia’s stock share price success has been supported by strong financials, although some members of the market may be confused by the company’s recent gain.
Wall Street analysts anticipate that Nvidia’s stock revenues will reach $100 billion in this fiscal year and $130 billion in the next, with the company projecting revenues of $24 billion at the midpoint for its fiscal Q1 2025. In contrast, the Jensen Huang-led business reported fiscal 2020 revenues of somewhat less than $11 billion.
Over the past four years, the company’s revenues have increased six-fold, and profits have increased even more in line with this growth. With a proven history of execution and expectations of robust double-digit revenue growth, Nvidia’s stock brings to the table the possibilities of a market where most other legitimate growth tales, including Tesla (TSLA), appear tarnished in the short term.
Will the Price of Nvidia’s stock Ever Drop?
The stock of Nvidia’s stock has been hitting new highs virtually every other day, so anyone expecting a significant decline in value must have been disappointed. Notably, based on certain indicators, Nvidia’s valuation still appears far from stretched even if it has dramatically increased from its 2022 lows. Only Meta Platforms (META) and Apple trade at a lower price-to-earnings multiple among NVDA’s “Magnificent 7” rivals, with the stock presently trading at a next 12-months (NTM) multiple of 32.1x.
Wall Street experts anticipate that Nvidia’s surge will continue, and they have given the company a consensus “Strong Buy” recommendation. After Nvidia released its fiscal Q1 earnings last week, at least 17 brokerages increased their target price, according to Reuters. One brokerage, UBS, stood out from the others, lowering Nvidia’s stock target price from $850 to $800. Due to “some potential slowing in revenue growth.”
Is NVDA Going to Be the Biggest Company in the World?
According to Rosenblatt Securities, Nvidia’s stock has set a new Street-high target price of $1,400. This suggests that the business’s market valuation will reach $3.5 trillion. Surpassing that of Microsoft, the largest U.S. corporation at the moment. A few years ago, you may have been laughed at for speculating about Nvidia. Becoming the largest corporation in the world, but it appears that this is now a possibility.
A brief examination of the evolution of the largest U.S. corporations reveals. That winners have shifted throughout time in tandem with changes in the market’s attitude and their financial success. For example, Microsoft was the largest U.S. firm at the beginning of 2000, but General Electric (GE) quickly overtook them. ExxonMobil (XOM), an oil giant, was the largest U.S. firm throughout most of 2005–2011. With a few fleeting exceptions, the manufacturer of the iPhone has mainly maintained. Its position as the most valuable firm in the world since it attained that status in 2011.
But Microsoft overtook Apple last month, taking away its $3 trillion market capitalization. And the title of being the biggest corporation in the world. And Apple hasn’t been able to take it back yet. By the way, Tesla’s CEO, Elon Musk, thinks the company will top the global business rankings eventually. Even though Musk is well-known for making outrageous promises. Such as those regarding Tesla’s route to complete autonomy. The truth is that stock market winners have evolved and will likely continue to do so in the future.
According to Damodaran, Nvidia’s stock is too overpriced.
Nvidia’s stock is now leading the market, and following last week’s fiscal Q4 results call, expectations are even higher. However, other investors, like value expert Ashwath Damodaran, feel that the increase in Nvidia’s stock has gone too far. The “dean of valuation” singled out NVDA in particular, even though he thinks nearly the whole “Magnificent 7” is overvalued.
To be sure, value investors like Damodaran shouldn’t be buying Nvidia’s stock at the multiples it now trades at. But for investors seeking expansion, I think Nvidia is a long-term buy-and-hold. Opportunity with the potential to overtake the market leader in the future. Mohit Oberoi held positions in AAPL, AMZN, META, MSFT, GOOG, NVDA, and TSLA as of the publishing date. This article’s facts and information are all provided only for educational reasons. Please click this link to check the Barchart Disclosure Policy for more details.
Blog By:- ExpertSadar
