It’s impossible to ignore the effect that artificial intelligence (AI) has had on the technology landscape over the past year Nvidia (NASDAQ: NVDA) has been the standard bearer. The company’s chips are at the heart of the AI revolution and provide the computing power that makes it all possible. This in turn has caused the stock to rise 215% in the past year. These gains led to Nvidia’s high-profile 10-for-1 stock split, which closed last week.
After the stock’s epic run to a $3 trillion market cap, Wall Street is reevaluating Nvidia’s future prospects. There’s a new analyst price target that should be of particular interest to shareholders.
Next stop: $5 trillion?
Rosenblatt Securities analyst Hans Mosesmann reiterated his buy rating on Nvidia shares and raised his price to $200. That represents a potential upside for investors of 53% compared to Monday’s closing price, and would push Nvidia’s market cap within striking distance of $5 trillion. One aspect of Nvidia’s business that is being overlooked by investors is the software side. “The real story lies in the software that complements all the good things about the hardware,” the analyst wrote.
He further suggested that demand for software will increase over the course of “the next decade in terms of the overall sales mix.”
I think the analyst hit the nail on the head. Nvidia’s lead lies not only in the hardware, but also in the accompanying software that ensures top performance. Ark Invest’s Cathie Wood estimates that the total AI software market could be worth $13 trillion by 2030, illustrating the scale of the opportunity ahead.
Additionally, Nvidia will begin shipping the next generation of Blackwell processors later this year, which will strengthen the company’s increasing lead in AI chips.
Nvidia shares are currently selling for 51 times forward earnings. While that’s a premium valuation, it’s an attractive price for a stock that has generated 27,450% returns over the past decade.
There’s still a long way to go, which is why Nvidia stock is a buy.
Should You Invest $1,000 in Nvidia Now?
Before you buy shares in Nvidia, consider the following:
The Motley Fool stock advisor The analyst team has just identified what they think is the 10 best stocks for investors to buy now… and Nvidia wasn’t one of them. The ten stocks that survived the cut could deliver monster returns in the coming years.
Think about when Nvidia created this list on April 15, 2005… if you had $1,000 invested at the time of our recommendation, you would have $802,591!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including portfolio building guidance, regular analyst updates, and two new stock picks per month. The Stock Advisor is on duty more than quadrupled the return of the S&P 500 since 2002*.
View the 10 stocks »
*Stock Advisor returns June 10, 2024
Danny Vena has positions at Nvidia. The Motley Fool holds positions in and recommends Nvidia. The Motley Fool has a disclosure policy.
Is Nvidia Stock Going to $200 in the Wake of the 10-for-1 Stock Split? 1 Wall Street Analyst Thinks So was originally published by The Motley Fool
