Wall Street is becoming more optimistic about the GPU innovator as its AI possibilities improve.
What took place
Nvidia (NVDA 0.43%) stock prices soared on Monday, rising as much as 6.8%. The stock was still rising as of 2:30 p.m. ET, up 6.1%.
Bullish remarks from a Wall Street investment bank served as the impetus that drove the semiconductor specialist higher.
What follows now?
The face of generative AI is now Nvidia. Not only was the company’s growth stronger than anticipated when it reported the results for its first quarter of fiscal 2024 (which ended on April 30), but its projection as well. Nvidia predicted revenue increase of 64% year over year in Q2, citing high demand for the AI chips.
Pundits have taken sides in the argument over whether the opportunity has been overvalued. The stock is presently trading for 51 times projected earnings and 18 times projected revenues, which is inflated by both standards.
Yet the argument to continue to hold or even buy more is compelling. While estimates vary, Morgan Stanley analysts argue the market for AI is massive, conservatively estimated at $6 trillion. Furthermore, advances in AI are possible because of Nvidia’s increasingly robust processors, which provide the computational horsepower necessary to bring generative AI to life.
For investors with a long outlook, it’s best to buy Nvidia (if you haven’t already), leave it in your portfolio, and be prepared for a bumpy — but profitable — ride.
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Stock Advisor is the online investing service that has beaten the stock market by 3x since 2002*. And right now, they think there are 10 stocks that are better buys.