“Buy low, sell high” goes the well-known investing mantra. Judging by this logic, Nvidia (NASDAQ:NVDA), which has been on a quite a run this year, should not be such an enticing investment at present.
Driven by the explosive growth of the AI industry, NVDA has seen its share prices gain 138% in value in 2024 alone.
Considering this rapid growth, is it time for investors to sell NVDA? According to On the Pulse investor, the answer is a resounding no.
“Nvidia’s valuation is actually not excessive at all,” argues the investor.
Though acknowledging the white-hot growth, the investor remains bullish about NVDA’s future prospects and its data center business in particular.
“I think investors are still underestimating Nvidia’s sales potential, particularly as the expansion of the data center market and the AI cluster upscaling opportunity are concerned,” writes On the Pulse.
NVDA’s position as the undisputed leader in the AI processor market provides an opportunity for continued gains well into the future, argues the investor, who believes “Nvidia’s AI growth curve is just getting started.”
Looking at the broader machine learning sector, On the Pulse notes that this promising field is “poised to see skyrocketing growth until the end of the decade,” with NVDA leading the charge.
Regarding valuation, On the Pulse compares NVDA to its closest competitor, AMD, which is priced at a multiple of 33x future earnings, close to NVDA’s 35x multiple. This comparison suggests that NVDA’s valuation is reasonable and not excessively high.
“With a nearly identical earnings multiple, I would choose Nvidia any day of the week given its commanding market share in the GPU market,” writes On the Pulse, who concludes that “the 35x earnings multiple as well as the potential for substantial sales estimate beats in the data center segment moving forward make Nvidia a solid growth investment.”
Consequently, On the Pulse is confidently rating Nvidia shares a Buy. (To watch On the Pulse’s track record, click here)
Over on Wall Street, analysts tend to agree with the investor. The heavily covered stock has had 41 analyst assessments over the past three months, which break down into 37 Buy and 4 Hold ratings. That’s naturally culminating in a Strong Buy consensus rating. Meanwhile, the average 12-month price target of $140.70 implies an upside of ~19% for the next 12 months. (See NVDA stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
