NVIDIA NVDA has been on an explosive surge this year with no signs of a slowdown, fueled by the artificial intelligence (AI) frenzy. The chipmaker is on track to overtake Apple (AAPL) as the world's most valuable company, topping $3.5 trillion in market capitalization. The stock has risen 190% so far this year and is expected to rise further.
Most analysts believe NVIDIA will become far more valuable in the future due to its dominance in the billion-dollar AI chip market.
NVIDIA is the world leader in AI chip design and software, controlling between 80% and 95% of the market, according to Reuters. Its success is largely attributed to its leadership in developing advanced graphics processing units (GPUs), which are unmatched in producing processors that power artificial intelligence systems, including generative AI, the technology backing OpenAI’s ChatGPT that can create text, images and other media.
Major cloud service providers rely on NVIDIA’s GPUs to train and run AI applications. The company’s clients include around 20,000 start-ups, along with big names like Microsoft, Alphabet and Amazon.
CEO Jensen Huang expects the data center business to grow "quite significantly next year” and said the demand for its AI GPU called Blackwell is “insane.” It expects billions of dollars in revenues from the new product in the fourth quarter. The chipmaker is attempting to expand production, partnering with Foxconn to build the world's largest Blackwell production facility in Mexico. Analysts at Morgan Stanley project that Blackwell could bring in $10 billion in added revenues before the year-end (read: NVIDIA Stock Up 155% The Year: Still a Buy? Related ETFs to Consider).
NVIDIA’s next-generation GPU chip is expected to drive another round of massive growth. The AI chipmaker unveiled a high-powered version of its Blackwell chip — called the Blackwell Ultra — slated to release in 2025, followed by a new AI chip platform, Rubin, in 2026. The company will debut an Ultra version of Rubin in 2027.
NVIDIA’s revenues have more than doubled in each of the last five quarters, but the streak is expected to end in the third quarter. However, its blistering revenue growth is expected to continue. The Zacks Consensus Estimate calls for 80.7% revenue growth for the fiscal third quarter and 62.1% for the fourth.
The chipmaker’s earnings are also growing at a steady rate, with projected growth of 85% for the fiscal third quarter and 50% for the fourth. NVIDIA’s earnings surprise history is good, as it delivered an earnings surprise of 12.70%, on average, in the last four quarters.
Wall Street analysts maintained their bullish view on the stock, with many raising the target price. Citing strong demand for AI, Bank of America raised the price target from $165 to $190, while investment research firm CFRA raised its price target to $160 from $139.
Based on short-term price targets offered by 40 analysts, the average price target for NVIDIA is $151.36. The forecasts range from a low of $90.00 to a high of $200.00.
NVIDIA is by far the biggest outperformer among the so-called “Magnificent Seven.” It is currently trading at a P/E ratio of 50.95 versus the Semiconductor - General industry average of 23.12. Despite its high valuation, investor confidence remains strong due to its clear leadership in AI hardware and software solutions. Further, the AI chipmaker’s earnings are growing faster than its share price (read: Pain or Gain Ahead of NVIDIA ETFs?).
Further, the stock is currently trading at a PEG ratio of 1.43, much lower than the industry average of 3.81. The lower the PEG ratio, the better the value, as investors would be paying less for each unit of earnings.
NVIDIA currently has a Zacks Rank #3 (Hold) and a Growth Score of A.
While there are many ETFs in the space that are capitalizing on the solid growth of NVIDIA, we have highlighted those that have the largest allocation to the AI chipmaker.
Strive U.S. Semiconductor ETF (SHOC) – NVIDIA exposure: 26%
AXS Esoterica NextG Economy ETF (WUGI) – NVIDIA exposure: 25.5%
Grizzle Growth ETF (DARP) – NVIDIA exposure: 21.3%
VanEck Vectors Semiconductor ETF (SMH) – NVIDIA exposure: 22.8%
Columbia Semiconductor and Technology ETF (SEMI) – NVIDIA exposure: 17.8%
T-REX 2X Long NVIDIA Daily Target ETF (NVDX) – NVIDIA exposure: 200%
GraniteShares 2x Long NVDA Daily ETF (NVDL) – NVIDIA exposure: 200%
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NVIDIA Corporation (NVDA) : Free Stock Analysis Report
VanEck Semiconductor ETF (SMH): ETF Research Reports
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Strive U.S. Semiconductor ETF (SHOC): ETF Research Reports
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