Driven by the wave of artificial intelligence (AI), Nvidia's stock price has skyrocketed, with a market value exceeding the $3 trillion mark. Although it has also experienced consecutive days of decline, it is still the overall leader in the US stock market. As of Wednesday's close, Nvidia rose 2.69% to $134.91, with a 180% increase so far this year.
At present, except for a few individual analysts who hold a wait-and-see attitude towards Nvidia, the majority are still bullish. Among the 62 analysts tracked by FactSet, only 8 hold a neutral stance on Nvidia's stock.
A senior technology investor said that Nvidia's "money making train" has just departed.
What I mean is, from now until the end of this year, (Nvidia's value) may double again, "said Eric Jackson, founder of hedge fund EMJ Capital, on a podcast
From this perspective, Jackson believes that by the end of this year, Nvidia's market value may rise from the current $3.32 trillion to $6 trillion.
Jackson believes that by releasing a very, very strong performance report in August and/or November, demonstrating the sustained demand for H100 and H200 chips from the outside world, and showcasing the potential of its new Blackwell chip focused on artificial intelligence, Nvidia's market value is expected to reach the above level.
He pointed out that in this way, investors will be willing to pay a higher price to earnings ratio (PE) to hold the company's stocks. This is a bold prediction, as data shows that Nvidia's expected P/E ratio has reached around 50 times, almost twice the average P/E ratio of the market.
I don't know if it will be the performance for August, nor do I know if it will be the performance for November, but I think there will be this optimistic reaction. If so, it will return to the expected earnings of 65 times, and Nvidia's stock price will reach $250 per share, "he said.
The rise of Nvidia shocked investors. Because of this, some people worried that the stock had entered the "foam area", and even compared it with Cisco in the Internet era. In this regard, Jackson previously argued that there was no basis to compare Nvidia with Cisco during the Internet foam.
This is not Cisco in the era of networking. At that time, Cisco's forward P/E ratio reached a peak of around 136 times, while Nvidia was below the average level of the past five years. Therefore, despite the outstanding performance of the stock, it is still relatively cheap compared to past trading levels, "he said.
Jackson is not the only one who is optimistic about Nvidia. KeyBanc analyst John Vinh wrote in a client report this week that Nvidia's positive factors include:
1) Although Blackwell is set to launch in the second half of 2024, we have not seen any signs of demand suspension;
2) The demand for H100 remains strong as we continue to see urgent orders;
3) The interest and demand for GB200 are greater than we initially estimated.