Nvidia’s Impressive Ascent
Another day, another record high for Nvidia (NVDA) stock. In a stunning display of strength, the company’s market cap even briefly eclipsed that of Amazon (AMZN). Soaring 46% already this year, Nvidia reigns as the best-performing stock on the S&P 500 Index in 2024, building off its astonishing 240% gains in 2023. Last year, the chip maker attained a $1 trillion market cap. Now, in 2024, its market share has surged to an impressive $1.5 trillion, bolstering speculations of NVDA’s potential to breach the $2 trillion mark. This meteoric rise has prompted considerable discourse in the market, with some questioning the sustainability of Nvidia’s rally.
Prospects for Nvidia Stock in 2024
Wall Street consensus places Nvidia’s target price at $675.52. However, an ambitious target of $1,100 suggests that the stock may still have room to ascend. Besides, brokerage firms have steadily raised Nvidia’s target price following stellar earnings releases. Such behavior is not uncommon, as exemplified by Tesla’s (TSLA) tendency to trade above its consensus target price amid upward momentum.
Evaluating Nvidia’s Valuation
Nvidia’s upward trajectory has undeniably been fueled by the fervor surrounding the artificial intelligence (AI) space. Yet, concerns have emerged over its valuation, as fears loom regarding the sustainability of the AI boom and the onset of competition in the chip space.
Damodaran’s Take on Nvidia
Renowned valuation expert Aswath Damodaran has raised a red flag on Nvidia’s valuation, branding the “Magnificent 7” pack, including Nvidia, as overpriced. While Damodaran favors Apple and Tesla within this group, his bullish stance on Tesla contrasts with his prior skepticism about Tesla’s valuation.
Damodaran’s declaration of intention to offload Nvidia shares and his articulation of the disparity between Nvidia’s valuation and the preferences of value investors reflect the divided opinions on the stock’s worth.
The Debate on a Potential Stock Split for Nvidia
While debates surge over Nvidia’s value, speculative talk has turned to the possibility of an NVDA stock split. Given that Nvidia has previously split its shares on multiple occasions, discussions have gathered momentum, particularly within the retail investor community. The enthusiasm for a stock split has grown even as Meta Platforms (META) faces similar conjecture.
A final thought, as Nvidia scales new heights, discussion of a stock split may stir a gush of excitement among retail traders. However, questions linger about the long-term implications of such a move on Nvidia’s trajectory.