The Magnificent Seven stocks have been driving the markets higher in 2024, owing to insatiable demand around generative artificial intelligence (AI), with the tech-heavy Nasdaq and S&P 500 each up by double-digit percentages so far this year. The clear leader has been Nvidia (Nasdaq: NVDA), whose market cap just crossed the $3 trillion threshold, thrusting it ahead of iPhone maker Apple (Nasdaq: AAPL) and second only to software leader Microsoft (Nasdaq: MSFT).
As Nvidia continues to upgrade its microchip sets for AI innovation, there is no end in sight on this growth train. While Nvidia shares are up a whopping 143% year to date, there’s reason to still be bullish. The company is generating $80 billion in annual revenue, fueled by an estimated $34.5 billion in chip sales in 2023. As a result, Wall Street analysts are convinced the stock has as much as 25% additional upside potential in the near term.
If the most bullish of Wall Street estimates are right, Nvidia shares are headed for $1,500, suggesting another 25% upside in this stock. While Nvidia has a 10:1 stock split planned this month, that doesn’t change the total value of an investor’s holdings or alter the company’s value. However, it is viewed as a bold move indicating the management team’s confidence in the future performance of the stock. It also bolsters trading liquidity and brings the per-share price down to a more accessible level for small investors.
Source: Canva
Nvidia: Implied Upside of 25%
Nvidia CEO Jensen Huang has given Wall Street analysts plenty of reason to be bullish on the stock on which his massive compensation is based. After introducing the much-hyped Blackwell chipset for AI this year, Huang has promised annual upgrades of the company’s AI accelerators, the next one of which is called Rubin, a nod to American astronomer and pioneer Vera Rubin.
Early this week, Bank of America highlighted its “buy” rating on Nvidia stock with a $1,500 price target, which is at the higher end of the spectrum. Tech veteran Dan Niles weighed in on Nvidia stock since the company’s market cap milestone. Niles believes that in the next several years, Nvidia’s revenue is poised to triple while the stock price could double.
However, companies have already poured tens of billions of dollars toward training AI models while their strategies aren’t entirely clear just yet. As a result, the industry could experience a healthy pullback in AI spending as businesses crystallize their plans. While Nvidia’s revenue could be impacted in the short-term, Niles isn’t worried about the bigger picture for which demand remains intact and the peak remains years away.
Should You Invest $1,000 in Nvidia in June?
Right now, the stock market is rewarding growth, which plays nicely into Nvidia’s hand. As the leader of the AI pack, Nvidia will continue to benefit from the premiums that investors are willing to place on this sector. But they have good reason to, considering Nvidia’s dominant AI market share position coupled with GPU sales that are growing by a triple-digit percentage.
Investors who plunked down $1,000 on Nvidia stock just two years ago would have raked in profits of over $6,200 today. As long as you believe in the AI story, and Wall Street analysts are right, then betting on Nvidia, the clear market leader, is likely to be a winning strategy.
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