The technology sector continues to outperform the market as the race to AI shows no signs of stopping. Nvidia (NVDA), in particular, has benefited greatly from the surge in demand for AI, with the chipmaking giant surpassing a $3 billion market capitalization and gaining more than 200% in the last year alone. After a record year and sky-high expectations, does Nvidia have more room to grow?
On the latest episode of Opening Bid, EMJ Capital founder Eric Jackson told Yahoo Finance’s executive editor Brian Sozzi that this is just the beginning of Nvidia’s story. Jackson lays out why Nvidia could double its market cap to $6 trillion this year and become the largest company in the US by a wide margin. He points out that the chip giant tripled its market value in 2023 and has doubled it so far in 2024.
He explains: “Now we’re moving up again with Nvidia, and I wouldn’t be surprised to see another strong earnings report this fall… We’ll see evidence in the August report of early appetite for Blackwell chips, and we know these things are priced higher than than H100, H200. So it could be, but certainly in November we will have evidence of the real operational results.
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Video transcript
You were calling or are calling and you think a $6 trillion market cap for NVIDIA is possible.
Yes, possible this year.
And then this year, the reason, yeah, by the end of the year and here, here’s my, wait, wait, wait a second.
So wait, NVIDIA is a $3.2 trillion company and you see, you see six trillion by the end of the year, I could see this thing hitting, you know, between 202 and 50 a share by the end of this year .
Uh And so the reason, the reason is, over the last five years, if you go back and look at what, you know, how the forward price earnings multiple has varied for NVIDIA over that five year period, you know, that, that and this is true for most stocks like you, you go through these ups and downs constantly where there’s a euphoric reaction, maybe they have an amazing earnings report and then all of a sudden, like that, the company becomes really expensive on the move. forward multiple basis and then they have a duller earnings report and all of a sudden they, you know, these forward multiples drop dramatically.
And despite the fact that, obviously, NVIDIA’s share price has been on the rise for over a year, since May 2023.
And, I don’t know, it tripled last year and I think it doubled this year.
Um, the forward multiple has been below average for most of this move.
In other words, moving forward, it’s almost like Wall Street did.
I thought this would be like, okay, they had another good quarter, but in this, it’s going to slow down significantly from here and we’re going to go back to, you know, uh, you know, very low levels and in terms of how they were pricing this thing , yeah, we’re not.
And yet, like during that five year period, there were three times where the forward multiple went up to like, uh, there was one time, it was about 55 times forward earnings, um, it was about 63 times, uh , future profits when it peaked.
And there was a point where it almost got to 70 times, uh, forward earnings.
Uh, and then it declined rapidly for most of last year.
This has been like a standard deviation below the mean in the future.
And right now, this thing is about 39 times forward earnings, 40 times, which puts it in the middle.
So my belief is that, you know, now we’re rising again with NVIDIA and I, it wouldn’t surprise me, uh, uh, that we see another strong earnings report this fall, that would be a seismic event.
I mean, I added $3 trillion in market capitalization within a year, it’s a totally different company, like three other three or four other companies.
So, I mean, do you see what the next report looks like?
Is that that seismic shock?
I mean, where the orders really, almost like we saw last year, they came out and blew everything up, reset the guidance and just changed.
Everyone is thinking about the name.
Well, step back from the market, the market cap dollars that are being added and think about it in percentage terms like last year, NVIDIA basically tripled.
As I said, this year it has doubled and I’m saying, I’m saying it could double again by the end of the year.
And then it will be in August earnings, the next profit will be in August and the next one I think will be in November.
Uh, so, you know, I, I, I’m not sure, but I think definitely, you know, we’ll see evidence in the August report of the initial appetite for Blackwell ships and we know that these things are priced higher than H hundred H two hundred.
Um, so it could be then, or, or, you know, but, but certainly in November we’ll have evidence of actual operating results and we’ll find out if some of these apply to NVIDIA that’s saying like, oh, well, people just placed orders. doubles, triples and this will come back to Earth, right?
Or, uh, we’re going to find that, well, there’s still insatiable demand for these chips and this thing isn’t going to stop anytime soon.
And Blackwell’s margins are even better than, you know, what they’ve been delivering over the last year, which has already surprised us.
And then I think again, like, I don’t know if it’s going to be in August, I don’t know if it’s going to be in November, but I think there’s going to be this euphoric reaction and if it is, then it goes back to, uh, 65X future earnings.
You’re there, you’re there for about 250 a share.
