Nvidia’s (NVDA) profit train has just left the station.
Or so says a veteran technology investor.
“I’m saying this [Nvidia’s value] could double again by the end of the year”, EMJ Capital founder and president Eric Jackson said on my Opening Bid podcast (video above or listen here).
To put that into perspective, Jackson believes Nvidia’s market capitalization could reach $6 trillion by the end of the year, up from $3.25 trillion currently.
The company aims to get there, argues Jackson, by delivering a very, very strong earnings report in August or November (or both) that shows continued demand for H100 and H200 chips while also showcasing the potential of its new Blackwell focused on AI. chips.
This would be in line with what Nvidia founder Jensen Huang told Yahoo Finance about demand trends in late May.
If Nvidia’s earnings reports come in as he expects, Jackson believes investors will be open to paying a much higher price-to-earnings (PE) multiple to own its shares.
That’s a bold claim, given that Nvidia already trades at a forward PE of about 50 times, according to Yahoo Finance data, nearly twice the broader market multiple.
Jackson adds: “I don’t know if it will be in August [earnings]I don’t know if it will be November [earnings], but I think there will be a euphoric reaction. And if so, the stock goes back to 65x forward earnings and you get to $250 per share.”
Nvidia shares trade at $131 at the time of this writing, up more than 170% year to date.
It was certainly another year of milestones for Nvidia.
On June 18, its market value reached a staggering $3.34 trillion, surpassing Microsoft (MSFT) to become the most valuable company in the world. Before that, Huang took out his powerful Blackwell chips and proclaimed that the company is building AI factories.
Since then, Nvidia has lost the most valuable company crown to Apple (AAPL) and Microsoft (second place), but detractors on the street are few and far between.
“Positive takeaways for Nvidia include: 1) despite the imminent launch of Blackwell in the second half of 2024, we do not see any signs of a pause in demand as demand for the H100 remains robust as we continue to see rush orders ; and 2) interest and demand for GB200 is greater than we had initially sized, as the majority of the mix is expected to be NVL72 vs. NVL36,” Keybank analyst John Vinh said in a client note this week.
However, some permanent non-Nvidia bulls have started to appear.
New Street Research analyst Pierre Ferragu last week downgraded his rating on Nvidia to neutral, citing valuation concerns.
Ferragu said he sees “limited upside” based on conversations with contacts in the supply chain. Nvidia’s defense may not emerge after 2025, putting expectations at risk, Ferragu explained.
Meanwhile, Nvidia’s success story is attracting hungry competitors — and that could disrupt the chip juggernaut, warns Brook Dane, asset manager at Goldman Sachs.
“There is very little probability that there is no competition out there [for Nvidia],” he said.
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Below Opening bid episode, Goldman Sachs asset manager Brook Dane reveals his “other” top AI plays besides Nvidia.
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