Recent price moves with Nvidia (NASDAQ:NVDA) may suggest that, rather than hitting the $1000 per share milestone, NVDA stock is next headed back to lower price levels.
Although some may view this as cause for concern, this is not our view. Our time horizon with the AI chip leader’s shares extends beyond the immediate term.
In the coming years, as demand from Big Tech for processors used in the training of large language models will remain high. Demand for chips for other AI use cases will skyrocket as well.
This leaves Nvidia poised to keep on growing at an above-average pace. In turn, enabling the stock to sustain a premium valuation, and to rise further in line with this additional growth.
Hence, even as the next wave of massive moves may be down the road, don’t view recent price action as a red flag. View it as an opportunity instead.
NVDA Stock and the Market’s Reaction to GTC
Nvidia is currently hosting its GTC conference for artificial intelligence developers this week. However, the event of most importance to investors has already happened. On March 18, Nvidia CEO Jensen Huang delivered a keynote address to kick off the conference.
In this address, Huang made several product and partnership announcements. Namely, the unveiling of Nvidia’s latest high-performance chip, the Blackwell GPU. Outperforming its predecessors in terms of capability and energy efficiency, leading names in Big Tech are already lining up to buy them for AI inference purposes.
Marking the latest major development for NVDA stock, the keynote is driving a big rally, right? Well, not quite. Although the company lived up to expectations with the Blackwell unveiling, and many in the sell-side community raised their respective price targets following the event, the market reaction has been quite different.
Instead of experiencing a post-keynote rally, shares have instead slid slightly lower. Don’t view this reaction as being the beginning of the end for shares in this AI chip powerhouse. Far from it, as while investors aren’t reacting enthusiastically to the keynote, the forthcoming Blackwell launch may help fuel the next big rally for this stock.
Why a Path to $1000 Per Share Remains
There are many reasons why investors are selling rather than buying NVDA stock post-GTC keynote. For one, “living up to expectations” is just another way of saying that were little in the way of surprises with the keynote.
One can also say that investors “sold on the news,” but then again, it wasn’t as if the market was bidding up Nvidia stock ahead of this week’s event. Since early March, shares have more or less traded sideways. Mostly, because of concerns that Nvidia and AI stocks are overdue for a correction.
At first creating a ceiling for shares, these concerns are now placing pressure on top AI plays across the board. However, even as these worries are affecting sentiment now, and could continue to do so in the immediate-term, the market’s worrisome reaction may not last for long.
In the next quarterly earnings release, Nvidia’s existing chip products could continue to drive stellar fiscal results. A few quarters from now, Blackwell GPU sales could begin to contribute significantly to the top and bottom line. In turn, bolstering confidence that the company’s high-growth wave will extend to 2025 and beyond.
Bottom Line: Selling Now Could Prove Regretful
Continued strong demand for AI chips, and Nvidia’s ability to tap into this demand with increasingly stronger and more efficient products like the Blackwell GPU, hitting what are the high end of earnings forecasts for fiscal year ending January 2025 ($30.78 per share), and fiscal year ending January 2026 ($41.88 per share) is well within reach.
Despite recent “doom and gloom” headlines, economists say that the Federal Reserve remains on track to lower interest rates this year. A return to lower interest rates will help shares maintain their current mid-30s forward earnings multiple.
Both these factors could be more than enough to send NVDA stock to prices well north of $1000 per share. With this in mind, those deciding to skip or cash out of NVDA stock could end up regretting the move.
NVDA stock earns an A rating in Portfolio Grader.
On the date of publication, Louis Navellier had a long position in NVDA. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article.
The InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
Technology, Artificial Intelligence, Semiconductor
