Nvidia’s stock, a titan in the tech industry, has recently made a remarkable leap, breaking out of an eight-month stagnation and soaring to unprecedented heights. This surge is captured in our Chart of the Day, showcasing Nvidia’s journey to new all-time highs.
After months of trading in a consolidation range, Nvidia’s shares have taken a bullish turn, breaking past the $500 mark earlier this week. The momentum continued, propelling the stock to a record intra-day high of $546. This impressive performance has elevated Nvidia’s market capitalization to a whopping $1.34 trillion, ranking it as the fourth most valuable company in the S&P 500. It’s now trailing Amazon by a mere $250 billion in market cap.
The driving force behind Nvidia’s exceptional growth over the past year is its pivotal role in the generative AI revolution. The company is at the forefront, supplying the highly sought-after chips essential for powering AI technologies.
Katie Stockton, co-founder of Fairlead Strategies, sees potential for further gains following Nvidia’s breakout above $500. “The breakout resolved a four-month trading range in a bullish intermediate-term development,” Stockton explained to her clients. She predicts an initial target of around $602 for Nvidia’s stock, indicating an 11% potential upside from its current levels.
Despite Nvidia’s stock price climbing nearly 250% over the past year, its earnings multiple has seen a significant decline. Market expert Ed Yardeni highlighted this trend, noting that Nvidia’s forward price-to-earnings ratio has plummeted from a record high of 84.3x in June to just 26.4x today. This puts it in line with Apple’s multiples, and below those of other tech giants like Amazon and Microsoft.
Yardeni suggests that the stock market may have begun to factor in a tech-driven, productivity-led ‘Roaring 2020s’ scenario since the end of November 2022, aligning with the public debut of ChatGPT.
Nvidia’s breakout from its holding pattern and ascent to a record high is not just a testament to its dominance in the AI and tech sector, but also signals the market’s confidence in the company’s future and the broader tech-driven economic landscape. Investors and tech enthusiasts alike are watching Nvidia’s journey with keen interest, as it continues to shape the future of AI and technology.