2/6/2024

Nvidia is on the rise due to the AI boom

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ХОЧЕШЬ УЗНАТЬ КАК ЗАРАБАТЫВАТЬ НА НОВОСТЯХ?

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Key points:

  • Nvidia shares hit a new high after Goldman Sachs raised its price target on expectations of higher AI revenue.
  • Goldman Sachs raised its price target on Nvidia to $800.
  • Sales of the Magnificent Seven companies are expected to increase at an average annual rate of 12%.

Nvidia witnessed a surge in its stock value on Monday, reaching a new peak, following Goldman Sachs’ upward revision of its price target for the emerging chipmaker. The adjustment reflects the expectation of substantial earnings growth driven by the ongoing artificial intelligence boom.

The company’s shares experienced a 4% increase, reaching $689.21 and contributing to a noteworthy expansion of Nvidia’s market capitalization by approximately $70 billion. Closing at $1.63 trillion on Friday, the company’s valuation has seen remarkable growth.

Nvidia has already established itself as a prominent player in the artificial intelligence domain, experiencing a record monthly increase in market value during January.

The rapid ascent in share prices, marking a 39% rise at the beginning of 2024, has elevated their valuation, making them relatively more expensive compared to competitors. Nvidia’s current trading stands at 31.4 times the company’s forward valuation, surpassing the industry average of 22.9.

Analysts are optimistic about Nvidia’s success

“We believe Nvidia will remain the industry’s gold standard for the foreseeable future, given its robust hardware and software offerings and, importantly, the pace at which it continues to innovate,”

– says Goldman Sachs analyst Toshiya Hari.

According to data from LSEG, analysts have increased their price target for Nvidia to $800, indicating a potential 21% upside from the current levels. This is a notable jump from the previous target of $625. The bank has also raised Nvidia’s full-year 2025-2026 profit forecast by an average of 22%. This adjustment is attributed to the strong demand for artificial intelligence servers and an improvement in the supply of Graphics Processing Units (GPUs).

Nvidia has been highly successful, generating billions in revenue due to the increasing demand for AI. In contrast, chipmakers less involved in AI chip production, like Intel, have observed underperformance in their shares.

The upcoming release of Nvidia’s results on February 21, as reported by LSEG, is anticipated with expectations for fourth-quarter earnings per share to be $4.51 on revenue reaching $20.19 billion.

The dominance of the Magnificent Seven companies depends on sales growth

Strong sales growth will be key to whether the Magnificent Seven group of U.S. technology and growth stocks can continue to outperform after their explosive growth in 2023, equity strategists at Goldman Sachs say.

The Magnificent Seven—Apple, Microsoft, Alphabet, Amazon.com, Nvidia, Meta Platforms, and Tesla—are up between 50% and 240% in 2023, and together they accounted for more than 60% of S&P 500 stocks’ total historical returns. of the year.

The seven companies are expected to grow sales at an average annual rate of 12% through 2026, compared with 3% for the remaining 493 companies in the S&P 500 index.

ХОЧЕШЬ УЗНАТЬ КАК ЗАРАБАТЫВАТЬ НА НОВОСТЯХ?

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