Nvidia’s stellar performance in 2024 has caught the attention of investors and analysts alike, with the semiconductor giant’s stock price soaring nearly 179% year-to-date. The company’s shares have shown remarkable resilience, climbing 2.4% in the past week and an impressive 13.6% in October alone. Nvidia’s stock closed at $138 on Friday, just shy of its recent peak of $138.07 reached on October 14. This represents a significant 40% increase from its August lows.
The company’s market capitalization has swelled to $3.4 trillion, positioning it between tech behemoths Apple ($3.6 trillion) and Microsoft ($3.1 trillion). This remarkable growth has prompted industry experts to revise their price targets for Nvidia upwards.
Chris Versace, an experienced analyst and portfolio manager at Street Pro, recently adjusted his price target for Nvidia from $155 to $175, representing a 12.9% increase. This new target suggests a potential 28% upside from Friday’s closing price over the next 12 months. Versace’s decision was influenced by the robust earnings and guidance reported by Taiwan Semiconductor, the world’s largest semiconductor manufacturer and a key supplier to Nvidia.
While Versace’s adjustment was significant, it was more conservative than Bank of America Securities’ revision. The financial institution raised its price target for Nvidia by 18.2%, from $165 to $195.
Versace’s cautious approach stems from his desire to assess potential revisions in capital expenditure plans from major tech players heavily invested in AI-related applications and equipment. These key players include Alphabet (Google’s parent company), Amazon, Microsoft, and Meta Platforms (formerly Facebook). All four companies have been continuously updating their capital expenditure estimates throughout the year.
The upcoming earnings reports from these tech giants are eagerly anticipated, with Alphabet scheduled to report on October 29, followed by Microsoft and Meta on October 30, and Amazon on October 31. Apple is also set to release its results on the same day as Amazon.
Taiwan Semiconductor’s strong third-quarter performance has further bolstered confidence in the semiconductor sector. The company reported revenue of $23.5 billion, a 36% year-over-year increase, with impressive gross and net profit margins of 57.8% and 42.8%,
respectively. Taiwan Semi’s stock has surged 15.6% in October and 93% year-to-date, propelling the company into the exclusive club of corporations with market capitalizations exceeding $1 trillion.
However, geopolitical tensions between China and Taiwan pose a potential risk to Taiwan Semiconductor’s operations. To mitigate this risk, the company is working on establishing a manufacturing plant in Arizona, although the project has faced delays due to construction and staffing challenges.
As Nvidia continues to ride the wave of AI-driven demand, investors and analysts remain optimistic about the company’s future prospects. The upcoming earnings reports from major tech companies are expected to provide further insights into the semiconductor industry’s trajectory and potentially influence future price target revisions for Nvidia. With its strong market position and the growing importance of AI technologies, Nvidia appears well-positioned to maintain its momentum in the rapidly evolving tech landscape.