Nvidia Corporation (NVDA 0.48%) -- the undisputed king of AI semiconductor chips -- is priced at $727 per share. Blink and you might miss it. On Tuesday, investment bank UBS predicted that Nvidia's price will reach $850, giving investors a 17% profit before the end of 2024.
NASDAQ: NVDA
Key Data Points
Is it too late to buy Nvidia?
No, it's not.
Even at $1.8 trillion in market capitalization, Nvidia could still gain even more. The stock looks pricey at 95 times trailing earnings, but most analysts agree that Nvidia is growing so fast that its forward P/E ratio stops at 35 times earnings. And with a projected long-term earnings growth rate of 35%, that actually sounds like a pretty fair price.
Is a 17% profit enough?
Raising its price target by 47% (since the last assessment), UBS now sees a further 17% profit in Nvidia stock through the end of this year.
Granted, any investor would prefer to earn a 217% profit on Nvidia stock than just 17%. But who's to say Nvidia stock won't go up 17% this year ... and then keep on going up, perhaps even another 200%? UBS isn't. Its new price target only looks out one year. But it's only been a little over a year since ChatGPT was released for general use, making artificial intelligence the "new thing" in investing.
Considering how very early innings we are in the AI revolution, AI usage looks ready to skyrocket for years to come. And as AI gets used more, more AI chips will be needed to support that usage. Demand is so strong that UBS says Nvidia can raise prices on its chips, even as it grows supply. Nvidia dominates this arena with a market share of at least 80%, so the company looks poised for further growth.
