NVIDIA Corporation was incorporated in 1993 and is headquartered in Santa Clara, California. Specifically, we believe the stock is likely in a rinse and repeat cycle of what was observed in the months leading up to its F4Q24 earnings release, given no material changes to underlying AI momentum and GPU demand environment. Specifically, our thesis is that given AI momentum remains intact in the near-term, Nvidia is expected to exhibit an outsized jump in its multiple premium to peers after F1Q25 close, similar to what was observed in February. While we expect steepening deceleration in core data center growth through fiscal 2025 and towards fiscal 2028 before segment demand normalizes, they are unlikely to preclude further valuation appreciation over the near- to medium-term. Specifically, our forecast expects annual data center revenue growth to be halved through FY 2028. This is consistent with previously observed cloud momentum, which grew sharply during the pandemic and through FY 2022, accompanied by an adjacent valuation upsurge in the Nvidia stock.
Nvidia is trading right where it should be right now after normalizing for market’s favorable pricing of its F4Q24 outperformance and solid F1Q25 guidance. We have been tracking Nvidia’s valuation multiple on a relative basis to the broader semiconductor peer group over the past quarter. And Nvidia has consistently demonstrated a ~90% premium to the peer group trendline on a relative basis to its consensus growth estimate. Despite Nvidia Corporation’s lofty premium at current levels, we remain bullish on the stock considering its relative trend to the broader peer group. There is also resilient AI momentum in the near term, where demand for supporting processors remains a function of supply availability.
The company’s data center business, which is where many of its chips are bought for AI processing, brought in $240 million in revenue in the quarter. Considering the consensus growth estimate of 81.5% for Nvidia’s FY 2025 revenue, the stock should trade at about 9.5x on the proxy trendline. And applying the 122% pre-earnings multiple premium to the proxy trendline result would yield an estimated P/S multiple of 21.1x for Nvidia expected F1Q25 close. By applying 21.1x to Nvidia’s current consensus FY 2025 revenue estimate of $110.6 billion, the stock should trade at about $938 apiece.
This represents modest upside from the stock’s current levels, despite expectations for another leg up in Nvidia’s forward estimates post-F1Q25 earnings release. However, if a 122% multiple premium is applied to the semiconductor peer group’s current multiple trendline, the resulting P/S ratio of 22.4x would yield an estimated price of close to $1,000 apiece. There remains potential for a further upsurge of this extent approaching Nvidia’s next earnings release.
Stock-Split Watch: Is Nvidia Next?
Nvidia has posted a 5% on average over the course of the four-day event, followed by an immediate, yet brief, pullback, which could mark an opportunity for upside potential leading up to its next earnings release. And market’s steadfast confidence in Nvidia’s widening lead in the heated AI race is evident in the stock’s swift recovery this week. Our analysis shows that Nvidia is currently trading exactly at where it should be.
- Specifically, our thesis is that given AI momentum remains intact in the near-term, Nvidia is expected to exhibit an outsized jump in its multiple premium to peers after F1Q25 close, similar to what was observed in February.
- And continued resilience in Nvidia’s core demand environment is corroborated by the elevated level of ongoing and impending investments into the nascent technology.
- In Nvidia’s case, the answer to that question has been a resounding “yes,” as its graphics processing units (GPUs) have been in high demand due to interest in artificial intelligence (AI) computing.
- Nvidia stock price rose about 30% after the company nearly doubled analyst earnings expectations.
- Our updated fundamental forecast for Nvidia, taking into consideration its actual F4Q24 performance and F1Q25 guidance, expects revenue growth of 90% to $115.9 billion in FY 2025.
So if you’re looking for a stock split announcement, stay tuned to Nvidia’s Q1 FY 2025 results, which will be reported sometime in late May. The company’s history of stock splits suggests that another one could be imminent. In 2015, Nvidia dove head-first into the artificial intelligence space, releasing its first “Drive” chip for autonomous https://www.dowjonesrisk.com/ driving in cars, as well as its “Jetson” chip made for embedded computing on smaller AI-powered devices. Namely, the company has investments in voice-recognition company SoundHound AI as well as data analytics start-up Databricks. Get stock recommendations, portfolio guidance, and more from The Motley Fool’s premium services.
Nvidia’s stock price jumped 16% on Thursday, increasing the company’s market value by a staggering $273 billion in just one day, a record amount. In May of 2017, Nvidia released its Volta architecture of chips, that was such a dramatic increase in computing power that Nvidia stock price shot up about 17%, or $18 in a single day. Nvidia came into a bit of trouble after a report from Citron research at the end of 2016 said the company wasn’t actually gaining new business, just stealing market share from its rival, AMD. In 2007, the company achieved its first ever quarter with more than $1 billion in revenue, and was named company of the year by Forbes magazine, Nvidia stock price increased on the news. It was also awarded an Emmy award for the potential it helped unlock in the entertainment industry. Perhaps the most consequential advance in Nvidia’s history was the 2006 launch of the company’s CUDA development platform.
NVIDIA Corporation (NVDA)
On the artificial side, you’re essentially cutting the same-sized pizza into smaller slices. Investors with access to brokerages that offer fractional shares can already cut Nvidia’s stock into pieces as small as they want (usually down to one-thousandth of a share). Nvidia stock price hit a then all time high of over $23 in January 2002 but Nvidia stock price dropped dramatically back down to single figures in the same year. Livy Investment Research is a technology sector research analyst providing long investment ideas by uncovering hidden value ahead of the tech innovation curve. The chart below illustrates Nvidia’s quarterly revenues, gross profits, and free cash flows over the last decade.
This accordingly bodes favorably with Nvidia’s market leadership, and provides further fuel for a potential upsurge towards the $1,000 threshold in the coming months. Is right now a good time to buy the stock in anticipation of a run-up due to buying frenzies caused by a stock split? The only good reason to buy a stock is if the underlying business is worth owning. In Nvidia’s case, the answer to that question has been a resounding “yes,” as its graphics processing units (GPUs) have been in high demand due to interest in artificial intelligence (AI) computing. Alternatively, a flatter peer group trendline like that observed in mid-February could mark a fair industry bear case in the near-term.
Our updated fundamental forecast for Nvidia, taking into consideration its actual F4Q24 performance and F1Q25 guidance, expects revenue growth of 90% to $115.9 billion in FY 2025. This will be primarily led by consistent sequential expansion in data center sales. The chipmaker has been seeing soaring demand for its semiconductors, which are used to power artificial intelligence, or AI applications.
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While there are many companies shaping the AI narrative, I would argue that Nvidia (NVDA -0.12%) is cast in the lead role. Now that the stock price is above 2021 pre-split levels again, I’d say Nvidia is highly likely to enact a stock split. On January 22, 1999, the company holds its initial public offering on the Nasdaq exchange the Nvidia stock price was $12 a share. The company was the fastest every semiconductor company to reach $1 billion in revenue. With Nvidia stock hovering in the vicinity of the all-time high it set earlier this month, some investors may be wondering if they’ve missed out on the chance to profit. Given all the moves Nvidia is making and the ways it’s setting itself up for long-term growth, now is as lucrative a time as ever to scoop up some shares.
Based on the foregoing analysis, we believe AI momentum should remain intact and resilient in the near-term. Thus, any prolonged moderation should not fall far from the bottom observed in recent months. By applying a 122% multiple premium to this baseline, the resulting P/S ratio is at about 9.3x, which would yield an estimated price of about $920. As mentioned earlier, Nvidia exhibits company-specific tailwinds that corroborate continued growth outperformance in the near-term.
In other words, if humanity is really embarking on an AI transformation that will revolutionize technology like the advent of IoT, then existing compute infrastructure is likely only addressing the tip of an iceberg of demand. Nvidia reaffirmed its AI prowess in its third quarter earnings report of 2016. Nvidia stock price rose about 30% after the company nearly doubled analyst earnings expectations.
In all, just 26 of the 500 companies in the S&P 500 have market caps above $273 billion, including Nvidia.
Specifically, the higher baseline at current levels could remain sustainable, as it already reflects the broader peer group’s recent pullback to normalize for any previous upward market mispricing on the stronger-than-expected Q4 earnings season. Our current revenue growth estimates for FY 2025 through FY 2027 outperforms consensus expectations by a similar extent to what was observed post-F4Q24 earnings release. This accordingly corroborates the potential for another upward deviation in Nvidia’s valuation multiple premium to the broader semiconductor peer group leading up to its next earnings, which we expect to be another upside surprise. NVIDIA Corporation provides graphics, and compute and networking solutions in the United States, Taiwan, China, Hong Kong, and internationally. The company’s products are used in gaming, professional visualization, data center, and automotive markets.
Said investment plans are similarly echoed by SoftBank’s Masayoshi Son’s consideration of a $100 billion AI chip venture. Nvidia (NVDA -0.12%) has had an incredible rise since the start of 2023, up around 500%. As a direct result of its huge stock price increase, the cost of one Nvidia share is nearing $1,000. This threshold may seem arbitrary, but it’s actually an important milestone with a special place in the stock market’s mass psychology.
