Stacy Rasgon, senior analyst at financial services company Bernstein, said on Wednesday that Nvidia's sky high valuation may cause investors to hesitate, but he is confident that the chip manufacturer's stock price will continue to soar.
In early January of this year, this semiconductor company became the fourth highest valued company in the S&P 500 index and has repeatedly hit new highs. As of the close of the US stock market on Wednesday, Nvidia fell 0.58% to $560.53.
Although some people are concerned about whether such a high valuation can continue, Rasgon believes that Nvidia's target price is $700, and he believes that the trend of artificial intelligence will continue to drive its performance.
He said, "If you say the stock price of NVIDIA is soaring, just look at how much profit has increased. I don't know for sure. Profit has increased six or seven times, or some other number."
He summarized the reason for Nvidia's significant performance increase as follows: the scale of AI opportunities is enormous, and Nvidia is leading in the field of AI chips, in an absolute advantageous position. Moreover, the company is constantly upgrading and updating its flagship products.
Nvidia's latest performance report shows that the company's revenue in the third quarter reached a record breaking $14.51 billion, an increase of 279% compared to the same period last year. Rasgon added that given Nvidia's profit rate surpassing its stock price increase, this makes Nvidia's P/E ratio very attractive.
He said, "If you believe this, it's actually one of the cheapest artificial intelligence themes in the field. AMD is much more expensive than Nvidia, Marvell Technology is much more expensive than Nvidia, and even Intel is much more expensive than Nvidia."
In 2023, Nvidia's stock price rose by 223%, and this chip manufacturer is one of the seven large technology companies driving a significant increase in the S&P 500 index. The company has received tremendous impetus from the development of artificial intelligence, as its semiconductors are often used to create the infrastructure used in this emerging technology.
In terms of core business, the company has not slowed down either. Rasgon emphasized that the launch of new products will maintain its leading position, such as the Grace Hopper superchip and the upcoming upgraded H200 GPU.