Nvidia (NASDAQ:NVDA) continues to generate buzz as 2024 nears its close. The AI chipmaker, known for its meteoric growth, has seen its stock surge by nearly 190% this year.
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Still, investing in the three-trillion-dollar company is not without its risks. The major capex expenditures that are powering the AI revolution could be slowing down, while eager competition keeps trying to cut into NVDA’s industry-dominating market share.
So, is Nvidia’s winning streak nearing its end? Not if you ask Steven Fiorillo, a 5-star investor ranked in the top 1% of TipRanks’ stock experts.
“NVDA’s profitability and margins have expanded significantly, with a potential to become the first $5 trillion company,” Fiorillo opined.
Fiorillo’s optimism is rooted in Nvidia’s “exceptional” Q3 performance. He highlights the company’s stellar data center segment and sustained AI investments from megatech giants, which together fueled record-breaking revenues of $35.08 billion.
Having closely followed earnings calls from big tech firms, Fiorillo remains confident that this spending momentum will endure well into the future.
“The largest companies in the world are not slowing down on CapEx, and it’s driving NVDA’s earnings,” Fiorillo adds, citing that “MSFT, AMZN, GOOGL, and META have increased their allocation toward CapEx by 180.69% ($128.21 billion) over the past 5-years.”
It is not just Nvidia’s gargantuan revenues that the investor finds enticing, but the gross profit margins of 75.86% that are allowing NVDA to continue “driving massive amounts of profits to its bottom line.”
This momentum is driving NVDA towards becoming the most profitable company in the world, with Fiorillo forecasting $100 billion in net income within the next two years. In his view, Nvidia’s growth potential outpaces its peers in the Magnificent Seven, setting the company apart in a crowded field of tech heavyweights.
With Nvidia’s stock soaring, some skeptics have flagged its valuation as a red flag. But Fiorillo sees it differently. Nvidia’s P/E ratio of 26 sits well below the Magnificent Seven’s average of 34.14. In his view, the “overvalued” argument doesn’t hold much weight.
“Growth investors always justify paying large multiples for growth, and NVDA isn’t even trading at a large multiple for the amount of growth it is expected to produce… EPS is expected to grow by 89.15% over the next 2 years,” the investor summed up.
Concluding that “NVDA is a steal,” Fiorillo rates Nvidia shares a Strong Buy. (To watch Fiorillo’s track record, click here)
Wall Street analysts largely share his optimism. With 37 Buy and 3 Hold ratings, Nvidia holds a consensus Strong Buy designation. Its 12-month average price target of $176.14 implies a potential upside of roughly 24%, a promising outlook for a company already leading the charge in AI innovation.
Wall Street has few naysayers when it comes to Nvidia. With 37 Buy and 3 Hold ratings, NVDA enjoys a consensus Strong Buy rating. Its 12-month average price target of $176.14 translates into ~24% gains in the coming year. (See NVDA stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
