Nvidia's shares soared to a new peak during early trading on Monday.
Nvidia's shares soared to a new peak on Monday, surging 4.7% despite a mid-December slump. The surge came as shareholders eagerly anticipated an update from the tech giant's CEO Jensen Huang, who was set to deliver the keynote address at CES, one of the world's biggest tech events.
But there was more to Nvidia's rise than just Huang's appearance. Foxconn, a global electronics giant better known as Hon Hai Precision Industry, announced record fourth-quarter results on Sunday, thanks in part to robust demand for AI-centric servers. Given that Nvidia supplies Foxconn with many of the GPUs used to power AI, the news boded well for the chipmaker.
Nvidia's AI Dominance
The AI market is in its early stages, but it's expected to be worth a staggering $15.7 trillion by 2030. And Nvidia is firmly entrenched in this market, thanks to its early recognition of the AI trend and its comprehensive offerings. The company provides not just chips but also software and specialized computers for AI tasks, giving it a unique advantage in the market.
Nvidia's stock trades at 59 times earnings, which might seem expensive. But when you consider that the company has traded at that multiple for the past 10 years on average, it doesn't look so bad. Plus, looking ahead, Nvidia is selling for just 34 times next year's expected earnings, making it a much more attractive investment.
CES 2023 and Beyond
CES is an opportunity for tech companies to showcase their latest innovations, and Nvidia was no exception. CEO Jensen Huang delivered a keynote address that painted a picture of the future of AI and Nvidia's role in it. He talked about Agentic AI, a new generation of AI that can make decisions and interact with the world in a more human-like way.
Huang also discussed partnerships, including Nvidia's work with Super Micro Computer on advanced AI data center systems. And there were rumors of an AI-centric CPU, which would further cement Nvidia's position in the market.
Despite the excitement surrounding CES, some analysts are cautious about Nvidia's stock. They argue that while the short-term trends look good, the stock may struggle in the weeks following the earnings announcement on February 26. That's because the market is expecting strong numbers, and unless Nvidia surprises everyone, the stock might not live up to its lofty expectations.
But the long-term prospects for Nvidia look very promising. Analysts expect the stock to trade at $178.84 by the end of 2025, representing a nearly 34.66% potential upside over the next 12 months. And the stock is a consensus buy, with a 1.3 ‘Strong Buy’ rating on a scale from 1 (‘Strong Buy’) to 5 (‘Strong Sell’).
In conclusion, Nvidia's dominance in the AI market and its strong stock performance are driven by a combination of factors, including strong demand, innovative products, and strategic partnerships. While there are short-term fluctuations, the long-term prospects for the company look very promising. So, is Nvidia stock a buy near a new all-time high? Based on the evidence, it certainly seems like it.
- Investors are keen on Nvidia's earnings announcement on February 26, as the company's stock performance is closely linked to its financial reports, especially in the context of AI-centric demand and expansive market potential.
- Despite the anticipated surge in demand and Nvidia's strong position in the AI market, some analysts caution about potential short-term fluctuations after the earnings announcement, given the lofty expectations the market has set.
- Nvidia's impressive performance in the AI market and the continued growth of this sector has made the company a popular choice among investors, contributing to its COO Jensen Huang's keynote discussion at CES 2023, focusing on Agentic AI and strategic partnerships with firms like Super Micro Computer.
- The rumors of an AI-centric CPU from Nvidia, further bolstered by their strong partnerships and product offerings, have fueled positive sentiment in the finance world, underpinning the consensus buy rating amongst analysts and the expected price increase to $178.84 by the end of 2025.
