Nvidia (NVDA +1.73%) has had a blistering run over the past year, but it hasn't all been in a straight line. After surging 828%, the artificial intelligence (AI) chipmaker shed 27% of its value this summer, only to come roaring back to hit new heights just last week.
Expectations are high going into Nvidia's fiscal 2025 third-quarter report next week, and some investors are wondering whether the stock can possibly live up to its lofty expectations.
One Wall Street analyst called Nvidia stock a "must own" and believes selling now would be a huge mistake.
NASDAQ: NVDA
Key Data Points
Melius Research says Nvidia is a buy
Melius Research analyst Ben Reitzes reiterated his buy rating, boosting his price target to $185 on Nvidia stock. This represents potential gains for investors of 25% compared to Tuesday's closing price. "While it didn't seem possible, we are even more excited about Jensen Huang's next chip than we were before," the analyst wrote. He compared the anticipation to excitement ahead of the release of Apple's (AAPL +2.08%) latest iPhone -- 15 years ago.
He went on to say that "giving up on Nvidia here after its hit -- Hopper [AI chip] -- is like giving up on Apple at iPhone 1 or 2." For context, since the iPhone 2 went on sale in July 2008, Apple stock has gained 3,540%. If that weren't enough, Reitzes called AI a "once-in-a-lifetime opportunity" for Nvidia.
I believe the analyst has hit the nail on the head. In an interview last month, CEO Jensen Huang said demand for the Blackwell chip was "insane." He went on to say, "Everybody wants to have the most, and everybody wants to be first." Those comments suggest the future remains bright for Nvidia.
The market for generative AI is expected to be worth between $2.6 trillion and $4.4 trillion over the coming decade, according to researchers at McKinsey & Company -- and Nvidia's chips underpin this paradigm shift.
The stock is currently selling for 36 times next year's earnings. However, Nvidia's strong track record shows why the stock is deserving of a premium.
