The amazing thing about Nvidia (NASDAQ:NVDA) stock isn’t that it has risen 2,000% in the last five years, it’s that the share price has further to go from here. So far this year, Nvidia stock has gained 84%, making it the second best performing stock in the benchmark S&P 500 index.
In the last 12 months, the share price has more than tripled, giving the company a $2.22 trillion market capitalization and leading it to be profiled on the TV show 60 Minutes. Yet for all its success, analysts still see further upside ahead for the chipmaker that controls about 75% of the global market for artificial intelligence microchips.
Bullish Outlook for NVDA Stock
Despite the incredible run in it share price and the fact that the stock is trading at 72 times future earnings estimates. The 41 professional analysts that rate NVDA stock give it a “strong buy” recommendation and an average price target that is 15% above current levels.
Many analysts are pounding the table for NVDA stock now as it has paused its rally over the last month (up just 0.88%) since the start of April. Analysts are urging investors to buy before the rally in Nvidia stock returns with full force.
Analysts at Citigroup (NYSE:C), for example, recently added Nvidia to a “90-day catalyst watch.” This came based on expectations that earnings reports from other chipmakers and memory suppliers will lift the stock, along with the 60 Minutes piece, and an update from CEO Jensen Huang at the Computex Taiwan conference in June.
The Citigroup analysts note that Nvidia’s stock suffered its biggest pullback in over a year during April, though the share price is now starting to quickly recover.
Market Dominance
What has analysts engaged isn’t just Nvidia’s world beating dominance of the AI chip sector, but that fact that the company is rolling out new AI chips at a blistering pace that is likely to keep it ahead of its competitors for years to come.
In March, Nvidia unveiled its next generation AI microchips at a heavily attended developer conference. CEO Huang introduced the new AI graphics processors during a town hall speech, calling them the “Blackwell” series.
The first Blackwell chip, called the “GB200,” is scheduled to ship later this year and will eventually replace Nvidia’s current generation of H100 chips that power AI applications and models and are in demand the world over.
The company’s Blackwell chips, such as the GB200, offer a huge performance upgrade for AI companies, says Nvidia’s management team. The additional processing power will enable companies to train bigger and more sophisticated AI models going forward. One of the new chips is expected to cost $30,000 to $40,000. Preorders have been huge.
Buy Nvidia Stock
Investors needn’t worry that they’ve missed the rally in Nvidia’s stock. The company’s share price can be expected to continue rising as sales of its AI chips gather steam and more powerful versions of the company’s chips come to market.
Despite the explosive rally in recent years, analysts see more gains ahead and remain bullish on Nvidia’s business and its future outlook. Investors should remain bullish too. Nvidia stock is a buy.
On the date of publication, Joel Baglole held a long position in NVDA. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
