2023 proved to be a rather fruitful year for tech investors, with NASDAQ finishing 43% up compared to the disappointment that was 2022.
Can 2024 keep the momentum going or perhaps even up the ante in the sector? All the indicators seem to say yes, it can — especially in the case of Nvidia (NASDAQ: NVDA).
Nvidia’s stake in the AI market
Numerous artificial intelligence (AI) companies surged on February 15 when Nvidia revealed its stake in them.
As reported, Insider Intelligence analyst Gadjo Sevilla suggests that Nvidia’s diverse investments in companies such as Arm Holdings (NASDAQ: ARM) — Nvidia’s most significant investment, totaling over $147 million — could facilitate the development of more cost-effective chipsets tailored for specific AI applications.
Indeed, Nvidia’s SEC filings indicate the firm’s commitment to artificial intelligence that goes beyond mere portfolio diversification. From Recursion Pharmaceuticals’ (NASDAQ: RXRX) advancements in biotech and SoundHound AI’s (NASDAQ: SOUN) presence in voice-activated platforms, Nvidia isn’t just backing companies but entire sectors poised for AI-driven transformations, which underscores its confidence in the technology.
Nvidia stock forecast
By acquiring stakes in companies like Arm Holdings and SoundHound AI, Nvidia has managed to surpass tech giants Amazon (NASDAQ: AMZN) and Alphabet (NASDAQ: GOOGL) in market capitalization, now being the third most valuable US company with a market capitalization of $1.82 trillion.
Some analysts are rather optimistic about NVDA stock targets, predicting numbers as high as $1,100 per share, according to TipRanks.
Morgan Stanley (NYSE: MS) and Goldman Sachs (NYSE: GS), for example, have raised their price targets for Nvidia shares even further. Morgan Stanley now forecasts Nvidia share prices to reach $750, upping its target by $147, while Goldman Sachs believes they could surge to $800, reflecting a 10% premium from current levels.
If the most daring predictions come true, Nvidia’s adjusted earnings per share could thus reach $115 by the end of fiscal 2028. In other words, its shares could potentially be valued at $2,875 within the next four years, indicating a substantial upside of 300%.
While some investors remain uncertain regarding its potential, the fact is that Nvidia already managed to surpass earnings expectations last year.
After all, with its dominant position in the AI supply chain, Nvidia still enjoys high demand, and with the launch of its H200 chips in 2024, as well as its focus on deep learning and neural network acceleration supported by specialized hardware features like Tensor Cores, it’s possible it could surprise skeptics once again.
Nvidia’s own predictions
While some of the projections may seem overly ambitious, it’s not entirely impossible that they could come true given historical trends. After all, a $10,000 investment in Nvidia made a decade ago would now be worth over $1.5 million.
Moreover, with the domestic GDP expected to reach over $51 trillion by 2075 according to analysts at IMF and Goldman Sachs, Nvidia’s potential to contribute significantly to its end markets could translate into substantial returns for investors over the long term.
Strong partnerships: A further growth catalyst
Nvidia Corporation recently collaborated with Cisco (NASDAQ: CSCO) to offer streamlined AI infrastructure solutions for data centers.
The two companies are set to provide AI enterprises with simplified cloud-based and on-premises infrastructure and software solutions for advanced AI and generative AI workload development and deployment.
Cisco and NVIDIA’s ethernet networking-based solutions will be available through Cisco’s extensive global channel, an offering that includes professional services and support dedicated to assisting businesses in deploying GPU clusters.
The collaboration has already attracted notable clients like ClusterPower, a cloud services provider in Europe leveraging innovative AI and machine learning solutions to enhance data center operations.
Nvidia also acquired a stake in Israel-based medical device company Nano-X Imaging (NASDAQ: NNOX), which utilizes AI software for report analysis, as well as the autonomous driving technology company TuSimple Holdings, which recently delisted from the NASDAQ.
Conclusion
Nvidia’s substantial dedication to research and development of AI solutions has firmly established its position in the industry. However, thanks to a relentless drive for innovation and numerous strategic alliances, the Californian tech behemoth could emerge as an even more dominant force in the market.
Sure, opinions differ on its valuation outlook, but the prevailing sentiment leans optimistic, buoyed by sustained momentum and investor trust.
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Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
