It is now undeniable that owning shares of NVIDIA Corporation (NASDAQ: NVDA) has been one of the greatest wealth creators of this generation. In just a few years NVIDIA’s market capitalization rose from a few hundred billion all the way up to its most recent peak of $3.4 trillion. There is an old mantra on Wall Street and Main Street that “Nothing Lasts Forever.” But is that really true? NVIDIA has morphed into the leader in artificial intelligence (A.I.) chipsets and processors and has only recently completed its 10-for-1 stock split.
The collective pool of analysts on Wall Street believe that NVIDIA’s stock still has a lot of upside ahead. NVIDIA is expected to report its next quarterly report in mid-August. NVIDIA shares recently peaked at $140.76, and after a much-needed and highly anticipated pullback the stock did briefly dip back under $120 to $118. Now its shares are back close to $130 all over again. And NVIDIA and the rest of the tech sector is due to report another stellar quarter of earnings and revenue growth as cloud and A.I. spending remain more than robust.
If analysts and investors have seen 200% and 300% gains in a fairly short time, and if nothing lasts forever, shouldn’t the analyst community be expected to tell clients to take at least some of proverbial “chips off the table” to be safe? It’s not even close — Wall Street analysts keep stepping all over each other with higher and higher price targets. NVIDIA could even become the first $5 trillion company (by market cap) if everything works according to their plan.
Oggonomics had noted in June that a rational pullback in NVIDIA’s stock should have been expected. It’s capital inflows and relative strength readings had reached incredible zenith readings that are very rarely ever seen in the investing world. Many comparisons were even made to the explosive gains and valuations of the Dot-Com Bubble that started formed in 1998 and 1999. That bubble burst in March of 2000 and many of those stock leaders of the Dot-Com Bubble imploded and never recovered back to their old highs.
Wall Street seems to not care that the stock surge was so crazy. The pullback seems to just be yet another buying opportunity according to analysts who follow the stock. When will a $4 trillion or $5 trillion valuation actually occur? Typical analyst price targets issued with each report are generally considered to be a 12-month price target.
Before you blindly trust analysts and their price targets, the past doesn’t always translate into the future. Price targets do not always materialize. Some analysts cannot help themselves from raising target prices even after the stock has peaked. And some analysts refuse to accept that things have changed. As for NVIDIA, there is no way to know if they stock peaked, if things have changed, or if it will endlessly grow into the world’s largest company. Demand for its Blackwell chips and the rest of its business is through the roof. No analysts are calling for business to contract any time soon. And A.I.-related spending has become an IT-related black hole that is sucking up money away from other sectors of IT-spending.
In the week after July 4, two analyst price target hikes have been seen in just two days:
NVIDIA was reiterated as Buy and its price target was raised to $150 from $120 at UBS. That call (July 8) was based on solid demand for Blackwell and the firm sees $5.00 in EPS as doable in 2025.
NVIDIA was then reiterated as Overweight and its price target was raised to $180 from $130 at KeyBanc Capital Markets (July 9).
Here is a myriad of analyst price target hikes seen just since the 10-for-1 stock split was reflected in the recent share price:
- Morgan Stanley (Overweight) target raised to $144 from $116 (July 1)
- Truist (Buy) target raised to $140 from $128.80 (June 27)
- Cantor Fitzgerald (Overweight) target raised to $175 from $140 (June 26)
- Citigroup (Buy) target raised to $150 from $126 (June 26)
- (Jefferies (Buy) target raised to $150 from $135 (June 24)
- Melius Research (Buy) target raised to $160 from $125 (June 21)
- BofA Securities (Buy and Top Pick) reiterated target of $150 (June 19)
- Tigress Financial (Buy) target raised to $170 from $98.50 (June 18)
- Wells Fargo (Overweight) target raised to $155 from $125 (June 18)
- Rosenblatt (Buy) target raised to $200 from $140 (June 18)
As you may have noticed, there is not a single analyst downgrade from any of the most widely followed brokerage firms covering NVIDIA. One issue is that most analysts and investors alike feel the real wave of A.I. is still only in the infancy state. Most companies are still just working toward implementing A.I. in some portions of their business operations, let alone the next $50 trillion improvement to society that NVIDIA has touted. Another issue for seeing no downgrades is that any analyst who would dare formally downgrade this stock would 1) fear the biggest gains in recent history and 2) worry about being the only person complaining about winning a lottery ticket.
Whether you choose to follow any analyst call is entirely up to you. Do not forget that analyst calls should never be the only reason to buy a stock. And do not forget that these big targets ahead throw some serious dirt on the so-called Efficient Market Hypothesis.
Technical traders who only use charts and momentum to judge a stock might have more concern around the 20-day, 50-day and 200-day moving averages. At this time, these are the moving average numbers to watch but remember these numbers change daily:
- 20-day $123.34
- 50-day 109.55
- 200-day $73.38
Again, analyst calls should never be the sole reason for you to buy or sell a stock. It’s true for any stock in the world, and that includes the mighty NVIDIA. And the decision to buy, sell or hold is also solely up to each investor.
