Standing at the center of the revolution. That’s where Nvidia (NASDAQ: NVDA) finds itself. The revolution, in this case, is being fueled by the rapid developments in artificial intelligence (AI).
Nvidia has delivered such massive gains in recent years that it’s easy to overlook how the stock has performed over the short term. Most investors would be happy with a 20% gain in a year. Nvidia’s share price has soared over 20% in the last five weeks.
And analysts don’t think the momentum will evaporate. Here’s why Wall Street thinks Nvidia stock is still a buy.
We can explain Nvidia’s recent impressive gains in one nine-letter word: Blackwell. Nvidia CEO Jensen Huang said in an interview with CNBC earlier this month the demand for his company’s new Blackwell AI chip is “insane.” He explained, “Everybody wants to have the most and everybody wants to be first.”
The market response to Blackwell isn’t surprising. When Nvidia first introduced the new GPU architecture in a March 2024 press release, the headline stated that the Blackwell platform would “power a new era of computing.” That wasn’t just spin from the company’s marketing team.
Blackwell can run large language models (LLMs) with 1 trillion parameters at up to 25 times less cost and energy consumption than Nvidia’s industry-leading Hopper platform. Customers including Alphabet, Amazon, Meta Platforms, Microsoft, Oracle, and OpenAI were among the first to announce plans to use the new architecture.
Nvidia’s gains over the last few weeks were even higher. However, the stock pulled back after Bloomberg reported that the U.S. could impose caps on exports of advanced AI chips to some countries in the Middle East.
The average 12-month price target for Nvidia reflects an upside potential of nearly 14%, according to LSEG. One analyst thinks the stock could soar another 55% over the next 12 months.
Granted, Wall Street’s enthusiasm about Nvidia has declined somewhat as its share price has increased. In September, 55 of the 60 analysts surveyed by LSEG rated Nvidia as a “buy” or “strong buy.” So far in October, LSEG has surveyed 38 analysts. Twenty-two recommended the stock as a “buy” or “strong buy.”
Why do so many analysts still expect Nvidia’s momentum to continue? The positive sentiment is largely due to Nvidia’s continued dominance in the AI chip market. Although Nvidia has rivals, its GPUs remain the gold standard in training and running AI models.
Morgan Stanley likes that Nvidia’s Blackwell GPUs are sold out for the next 12 months. Analyst Joseph Moore said, “[E]very indication from management is that we are still early in a long term AI investment cycle.” The investment firm named Nvidia as a “Top Pick.”
We’ll have to wait and see if Wall Street’s target of another 14% gain by Nvidia will materialize over the next 12 months. However, I suspect this price target is overly cautious.
Nvidia hasn’t reported sales for its Blackwell chips yet. As the numbers begin to come in and keep growing, don’t be surprised if multiple analysts issue upward revisions to their price targets for the stock.
The AI revolution is only in its early stages, as Morgan Stanley’s Moore stated. And Nvidia will almost certainly remain at the center of this revolution for a long time to come.
Before you buy stock in Nvidia, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Nvidia wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $806,459!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.
*Stock Advisor returns as of October 14, 2024
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Keith Speights has positions in Alphabet, Amazon, Meta Platforms, and Microsoft. The Motley Fool has positions in and recommends Alphabet, Amazon, Meta Platforms, Microsoft, Nvidia, and Oracle. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
—
Blog powered by G6
Disclaimer! A guest author has made this post. G6 has not checked the post. its content and attachments and under no circumstances will G6 be held responsible or liable in any way for any claims, damages, losses, expenses, costs or liabilities whatsoever (including, without limitation, any direct or indirect damages for loss of profits, business interruption or loss of information) resulting or arising directly or indirectly from your use of or inability to use this website or any websites linked to it, or from your reliance on the information and material on this website, even if the G6 has been advised of the possibility of such damages in advance.
For any inquiries, please contact [email protected]
