On Monday, NVIDIA CorpNVDA shares surged over 4% to surpass $514, reaching a new peak for the AI chipmaker. This surge in stock price was in response to Nvidia’s presentation at the CES event and news regarding its business dealings with China.
Surging Ahead: Since its recent low on Oct. 26, Nvidia’s stock has experienced a 27% increase, outperforming the S&P 500’s 14% growth during the same time frame. Despite more than tripling in the last year, CNBC’s Jim Cramer voiced his belief that “I think the company still is very undervalued,” citing a report by CNBC.
At present, Nvidia trades at approximately 24 times forward earnings, a sharp contrast to its five-year average of 39, according to FactSet data. Even with its stock price rise, Nvidia remains a strong and undervalued entity.
Nvidia is reportedly commencing mass production of AI chips for Chinese customers in line with the U.S. government’s revised export rules on AI technology. Despite plans from Chinese tech giants including Alibaba Group Holding Ltd BABA and Tencent Holdings Ltd TCEHY to order fewer Nvidia chips in 2024, favoring their own custom processors, Cramer downplayed this impact, maintaining that Nvidia’s data center chips remain superior.
During the same day, Nvidia also announced new GPUs for personal computers and professional workstations at the CES conference, designed to “unlock the full potential of generative AI on PCs”.
Proving Resilience: Cramer has consistently reiterated his confidence in Nvidia despite competition and market rumors. Back in October, amid rumors about Microsoft Corp MSFT challenging Nvidia with its own AI chip, Cramer reaffirmed his positive stance on Nvidia.
Even after Microsoft launched its in-house AI chips, Cramer maintained that Microsoft couldn’t compete with Nvidia, reflecting his unwavering faith in the chipmaker despite market fluctuations and competitive threats.
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