Is Nvidia Stock Going to $1,200? Wall Street Analyst Thinks So

Key Points

• Remarkable Growth: Nvidia's stock has surged nearly 400% since the onset of AI hype, attracting attention from investors and analysts.
• Analyst Prediction: Wall Street analyst Ananda Baruah of Loop Capital initiates coverage on Nvidia with a buy rating and a target price of $1,200, suggesting significant upside potential.
• Market Dynamics: Nvidia's unprecedented growth is fueled by the soaring demand for high-end AI chips, driving its data center business and revenue projections to record levels.

Nvidia (NASDAQ: NVDA) has emerged as one of the most astonishing performers in the stock market amid the fervor surrounding artificial intelligence (AI). Since the start of the previous year, the shares of this cutting-edge semiconductor company have soared by almost 400%.

According to one prominent Wall Street analyst, there may still be ample room for Nvidia's stock to climb higher. Ananda Baruah, an analyst at Loop Capital, has recently initiated coverage on Nvidia with a bullish buy rating and an ambitious price target of $1,200. This target stands as the highest among all analysts tracking the stock and implies a remarkable 65% increase from the current trading price.

It's worth noting that Nvidia's stock was trading below $120 per share as recently as October 2022, underscoring the rapidity of its ascent.

So, what's driving this meteoric rise in Nvidia's valuation?

The surge in expenditure on advanced AI chips, which enhance computing capabilities, has not only caught analysts and investors off guard but has also surprised Nvidia itself. In the first quarter of its fiscal year 2023, Nvidia exceeded its revenue guidance by approximately $700 million. However, this was merely the tip of the iceberg. Subsequently, over the following two quarters, actual revenue surpassed management's projections by a staggering $2 billion each time.

The insatiable demand for AI chips has propelled Nvidia's data center business to grow at a pace that even the company struggles to match. All eyes are now on the year-end fiscal report for 2024, scheduled for release on February 21, to ascertain whether Nvidia will once again outperform its already impressive $20 billion quarterly revenue outlook.

Loop Capital remains optimistic about Nvidia's prospects, anticipating continued surprises for investors as the company fulfills the burgeoning demand for its advanced chips over the coming years. The firm's ambitious $1,200 price target implies a trailing-12-month price-to-earnings (P/E) ratio of 158.

However, when considering Loop's forward-looking price target alongside Nvidia's earnings estimates, this valuation appears more reasonable. Analysts project the company to report earnings per share of $20.41 in fiscal 2025, resulting in a forward P/E ratio of 59. While still commanding a premium compared to the market average, this valuation presents a more attractive opportunity for long-term investors seeking exposure to the AI industry leader.