Zhitong Finance and Economics [[Note that just 10 days after the New Year, a familiar ** has returned to the top of the list: Nvidia (NVDA.]us)。
Last year's best** of the S&P 500 decisively broke through record levels with gains of more than 7% after months of struggle. The company currently has a market capitalization of more than 1$3 trillion, which is more than the fourth-largest Amazon (AMZN.) by market capitalizationUS) is about $250 billion.
Investors are still pushing the company's share price higher after Nvidia more than tripled in 2023, a fact that proves that market demand expectations for its chips for AI computing remain high. According to the data collected, Nvidia's revenue increased by 206% in the third quarter and is expected to grow by 232% in the fourth quarter.
It's a very large, fast-growing market, and they're dominant," said Michael Sansoterra, chief investment officer at Silvant Capital Management. "You can expect 2024 to be another year of solid returns for NVIDIA. ”
In an interview with JPMorgan analysts on Tuesday, Nvidia's CFO reiterated CEO Jensen Huang's statement that the company believes the company can continue to grow in 2025 as demand for AI-related products remains strong.
Last year, Biden** tightened restrictions on China's chip exports, putting Nvidia at risk of entering the Chinese market. Last fiscal year, Nvidia's sales in China accounted for 21% of its total sales. In response, Nvidia has developed a lower-performance version of the graphics chip for the PC and has promised to launch a similar version for data centers this year.
Earlier this week, Nvidia announced three new desktop graphics chips with additional components that will allow for better use of artificial intelligence on PCs without relying on remote services accessed via the internet. Nvidia is expected to report earnings by the end of next month.
Nvidia's profit for the current fiscal year is expected to reach nearly $28 billion, which has helped lower its valuation despite its soaring share price. Although the stock's forward price-to-earnings ratio has fallen to around 27x from 55x in May, its share price is far from cheap. The Nasdaq-100 is trading at a forward price-to-earnings ratio of around 24x.
If one compares Nvidia's current share price to its past performance, its share price looks much more expensive. Historically, Nvidia has a P/E ratio of around 68x, while the Nasdaq-100 has a P/E ratio of around 33x.
I still like this one**,said Shana Sissel, CEO of Banrion Capital Management, citing the company's valuation relative to revenue growth. "I do think it can keep the momentum going. ”
Even Nvidia's most loyal fans don't expect the stock to repeat its 2023 performance. The average Wall Street price target is around $650, which means that Apple will be 22% above current levels, making it one of the most profitable companies among big tech companies in the United States.
"If our standard performance for a ** is 200% per year, then we really need to revisit our expectations," Sissel said. She added that she still thinks Nvidia will outperform this year. For me, it's still a worthwhile to hold.