Nvidia, once the world’s most valuable company, experienced a 1.2% drop in shares early Thursday morning, falling to $124.92 after closing up 0.3% on Wednesday. Concerns arose about the company’s valuation amidst worries about its role in AI technology. Despite losing its leading position to Microsoft and Apple in market capitalization, analysts remain optimistic about its growth prospects. There haven’t been any significant developments from Nvidia or signs of competitors gaining market share in AI chips, leading to speculation that its growth may have been overestimated. However, industry feedback suggests increasing demand for Nvidia chips.
Analyst William Stein from Truist Securities raised his price target on Nvidia shares to $140 and maintained a Buy rating. He based the new target on a price-earnings multiple of 40 times his 2025 earnings forecast for Nvidia. JP Morgan’s survey indicated that 58% of research clients believed Nvidia’s market capitalization could reach $3.5 trillion to $4 trillion by year-end, up from its current $3.5 trillion. Other chip manufacturers like Advanced Micro Devices and Intel saw slight increases in early trading, while server manufacturer Supermicrocomputer rose 2.2%.
Nvidia shares have surged 155% year-to-date, outperforming the S&P 500 and Nasdaq Composite Index which saw 15% and 19% increases, respectively, during the same period. Despite the recent market fluctuations and concerns about its valuation, analysts remain bullish on Nvidia’s future prospects. For more information, contact Adam Clark at adam.clark@barrons.com.
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