At its current share price of $888, Nvidia (NVDA 0.03%) stock costs more than 3 times what it did a year ago. It's up 238%, to be precise, and now sells for a seemingly outrageous 37 times trailing sales.
And yet, if you ask the bankers at Raymond James, $888 isn't an unreasonable valuation for Nvidia stock at all. And Nvidia stock could hit $1,100 within a year.
Is Nvidia stock a buy at $888?
Nvidia shares may cost 3x what they did a year ago, but the stock is actually down 7% from highs hit three weeks ago, when the stock was approaching $1,000. Why? Nvidia may be a victim of its own success, as investors worry artificial intelligence customers will hold off on buying Nvidia's current H100 chips in hopes of buying the company's next generation of Blackwell chips, which are expected to be 4 times as powerful.
Not to worry, says Raymond James. Keeping its strong buy rating on the stock, RJ argues there's still more demand than supply for AI chips, and buyers will count themselves lucky if they can get even H100s today -- and are unlikely to postpone buying in hopes of getting Blackwells tomorrow. Basically, the thinking is that whether it's H100s, H200s, or B100s/200s -- any AI chips Nvidia is able to build, it will also be able to sell.
And until its competitors catch up, this may remain the case. Far from predicting a slowdown, most analysts agree Nvidia sales are likely to more than double to $60.9 billion this year -- then more than triple over the next four years, hitting $196.3 billion in 2028. That works out to an annualized sales growth rate of 49%. Projections for long-term earnings growth are even more stunning: 92% annualized through 2028.
As silly as it sounds, Nvidia stock at 37 times sales, and 76 times earnings today, may actually be cheap.
