There are so many reasons why investors may have turned bearish on Nvidia (NASDAQ:NVDA) over the past month. There’s been a “special rebalancing” within the Nasdaq 100 that essentially stipulates index funds will be required to sell NVDA stock and buy smaller-capitalization companies in a bid to improve diversification among indices. Then there’s simply the valuation question, with Nvidia now trading at among its highest levels ever on a price-sales basis.
That said, Nvidia stock has continued to chug along nicely today. The stock hit an intra-day high of more than $480 per share, which amounts to a fresh record high. This comes as analysts continue to raise their price targets on the company, with Truist upping its price target to $545 from $470.
Additionally, retail and institutional investors continue to appear content to pile into any company with direct exposure to the artificial intelligence (AI) trade. Nvidia has become one of the most concrete AI plays in the market, and given its recent price action, it’s not disappointing.
Let’s dive into what investors may want to make of the latest milestone for Nvidia today.
NVDA Stock Hits New Record High: What’s New?
Today’s upward analyst revision is something that’s sort of interesting to contemplate. Certainly, Nvidia’s forward-looking prospects have improved, and that’s why the market has bid up its price. But the question remains as to whether analysts are chasing the price performance of this stock or if they’re adjusting for new information over time.
I’m not so sure. Nvidia has run so far so fast, it’s caught many in the investing community off guard. And with significant career capital on the line for analysts following stocks like Nvidia, failing to keep one’s price targets in line with the market’s expectations can be a tricky exercise.
It’s also unclear to what extent the market’s bullish optimism on NVDA stock is being fueled by analyst price targets or vice versa.
That said, in this sort of investing mania, it’s really unclear just how high Nvidia’s stock price can fly. Indeed, at 44 times trailing sales, it isn’t a bargain. But obviously, investors are focused on what the future holds for the company’s revenue and earnings outlook. For those looking at 2025 or 2026 sales and earnings, maybe this valuation makes sense, and more all-time highs are on the horizon. We’ll just have to wait and see.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
