(BFM Bourse) – The graphics processor specialist closed Tuesday’s session at 487.84 dollars, its all-time high. But does the group still have anything under the hood to extend its formidable stock market journey?
We will have to get used to the records and dizzying figures with Nvidia. The graphics processor specialist ended Tuesday’s session up 4.16% to 487.84 dollars, signing an all-time high at the close. This Wednesday, the title is stable at the start of the session on Wall Street.
Tuesday’s rise was fueled by a general market move supportive of tech stocks, with US statistics (such as the number of job vacancies in the US) sending bond yields lower. This favors tech groups, whose valuations are correlated with the evolution of interest rates.
The stock’s advance was also driven by the announcement of an extended partnership between Nvidia and Google Cloud, which should broaden the distribution of Nvidia’s artificial intelligence (AI) technologies on Google’s cloud computing platform. .
Now Nvidia is worth more than $1.2 trillion on the stock market, according to data from investing.com and Yahoo Finance. This makes it the sixth capitalization in the world, according to the ranking of companiesmarketcap.com, a stone’s throw from Amazon (1391 billion dollars).
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More than 230% increase since the beginning of the year
Since the beginning of the year, Nvidia has seen its share price jump by nearly 234%. Remember that the company founded by Jensen Huang has greatly benefited from the rise of generative AI, at the heart of conversational robots, such as ChatGPT. The group dominates the market for graphics chips essential for generating advanced tasks and applications in artificial intelligence.
Microsoft and Google are thus equipped with thousands or even tens of thousands of Nvidia A100 graphics processors (GPUs) in their data centers to develop and train their conversational robots, ChatGPT and Bard respectively. The increased use of generative AI translates into more computing power requirements, and therefore greater demand for Nvidia’s products.
The surge in demand propelled the company’s financial results. In the second quarter, Nvidia had exploded analysts’ expectations by revealing revenues of 13.51 billion dollars, a jump of more than 100% year on year. Its third-quarter guidance also caught analysts off guard, with the company expecting revenue of $16 billion (vs. consensus of $12.6 billion).
However, these excellent results did not allow Nvidia to end up sharply during the session following the publication of these accounts. The title had taken 0.1% after having certainly increased by 3.2% the day before.
Towards a capitalization of more than 2000 billion dollars
So the market is probably starting to take in the company’s burgeoning prospects with generative AI. Which raises the question of its potential: can the value still climb the ladder and get closer to the top 5 or even the top 3 in the world of companies that are worth the most on the stock market?
Analysts seem optimistic. Wedbush raised its target to $600 last week, giving the stock more than 20% upside and would, on paper, put the company’s valuation at around $1.5 trillion. “We believe Nvidia’s forecast (despite the slight post-release pullback) points to a tidal wave of AI-related spending for the tech sector in the coming years,” said analyst Dan Ives. of Wedbush in charge of tech on X (ex-Twitter).
UBS for its part is buying on the value, with a slightly lower target of 560 dollars for the action. The Swiss bank expects, in its projections, that the company’s revenues will reach $57 billion in the fiscal year ending in January 2024, more than double the previous fiscal year. The turnover would then increase to 97 billion for the financial year ending in January 2025 and to 161 billion dollars for that ending in January 2028.
But perhaps the most impressive forecast comes from Rosenblatt Securities, which recently raised its target to $1,100 from $800 previously. Based on that price target, Nvidia would be worth between $2.4 trillion and $2.5 trillion, which would be close to Microsoft, the world’s second-largest market cap at just under $2.5 trillion. “Nvidia’s epic releases and forecasts for two quarters are unprecedented and it’s only just begun,” said Rosenblatt analyst Hans Mosesmann, quoted by Dow Jones Newswires.
More broadly, according to the consensus of investing.com, 47 of the 51 consulting firms following the value are buying with an average price target of 626 dollars, or nearly 30% potential.
The 10 largest market capitalizations in the world
(in billions of dollars)
- 1/ Apple: 2878
- 2/ Microsoft: 2440
- 3/ Saudi Aramco: 226
- 4/ Alphabet: 1702
- 5/ Amazon: 1391
- 6/ Nvidia: 1204
- 7/ Tesla: 816
- 8/ Berkshire Hathaway: 781.4
- 9/ Meta: 766
- 10/Eli Lilly: 526
Source: Companiesmarket.com
Julien Marion – ©2023 BFM Bourse