Nvidia (NASDAQ:NVDA) has continued to crush it in terms of stock price performance. In the last month alone, Nvidia stock has surged by around 36%. That’s not entirely surprising, given the two major positive developments that have played out during this time frame.
First, the AI chip leader once again wowed the market with its latest results and updates to guidance. Second, NVDA has just completed a 1o-for-1 stock split. This split made increased liquidity, and put the pricey stock more accessible to individual retail investors.
But now, following these developments, what’s next for NVDA? Or, to put it more directly, with these needle-movers now entering the rearview mirror, is it time to take profit and make an exit from Nvidia?
Not necessarily. Although there’s nothing wrong with taking some risk off the table, keep in mind that substantial upside remains on the table for shares.
Nvidia Stock: Still in the Fast Lane
Right now, upcoming macro developments could provide more runway for a broad market rally, or drive the next sell-off or correction. We’re talking about both the upcoming CPI print, as well as the latest post-meeting remarks from the Federal Reserve. Both are scheduled to occur this week.
However, assuming that both news items elicit a positive reaction, we don’t see why Nvidia stock will suddenly reverse course. Market-related factors could always drive volatility for the stock, but it’s hard to see shares falling off their current upward trajectory because of company-specific factors.
At least, given the following. Until third party analysis or management revisions to outlook say otherwise, investors will remain confident about Nvidia still being in the growth fast lane.
With higher-margin, high-performance AI and accelerated computing chips driving incremental revenue growth, the company is poised to report higher margins in the coming quarters.
In other words, outsized earnings growth compared to revenue growth. That’s not all. As Barron’s commentator Paul R. La Monica pointed out, in a post-split rundown on NVDA, shares are cheaper now than they were a year ago, due to earnings growth exceeding the stock’s gains over the past twelve months.
What About the Dow Inclusion Catalyst?
The generative artificial intelligence growth trend will continue to be the key driver for Nvidia stock, but another catalyst has emerged. In fact, since the announcement of the above-mentioned split last month, it has become increasingly top of mind among Wall Street and Main Street investors.
We are of course talking about the potential for NVDA to be added to the Dow Jones Industrial Average. Getting added to the Dow would have a positive impact. However, it’s important to see this factor as something that could supplement, not drive, strong total returns for shares.
Fortunately, leaving the heavy lifting to the AI growth catalyst doesn’t mean less stellar return await for NVDA. Again, with shares “cheaper” than they were a year ago, even as high growth persists, upside potential over the next twelve months, just on earnings growth, is nothing to sneeze at.
Although sell-side forecasts range widely, consensus calls for around 28% earnings growth during the fiscal year ending January 2026. The upper end of forecasts call for earnings growth nearing 90%-100%.
Even if we assume NVDA’s valuation multiple holds constant, this suggests another steady climb ahead for the stock between now and next June.
Bottom Line: Hold On if You Can
Some sell-siders are being cautious in their forecasts. Perhaps, way too cautious. They’re assuming that Nvidia’s growth will slow back down starting next year or in 2026. However, the rise of gen AI is still in the early innings.
It’s also what’s known as a secular growth trend. Hence, it may not be as strongly affected by an economic and/or market downturn compared to other growth trends. Food for thought, if you’ve been thinking of taking profit. While you’re perfectly free to do so, there’s still good reason to hold on if you can.
The same goes for those who’ve yet to buy. It’s not too late to enter a position. Elevated levels of growth will enable shares to sustain a premium valuation. In tandem with earnings growth, Nvidia stock is likely to keep on surging to new split-adjusted highs.
Nvidia stock earns an A rating in Portfolio Grader.
On the date of publication, Louis Navellier had a long position in NVDA. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article.
The InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
