Nvidia Stock Soars, Aiming for $6 Trillion Market Valuation

Nvidia’s stock (NASDAQ:NVDA) is experiencing a significant surge, and many experts believe this is just the beginning. Eric Jackson, founder and president of EMJ Capital, predicts that Nvidia’s market cap could reach $6 trillion by the end of the year, doubling its current valuation of around $3.25 trillion. This article explores the reasons behind Jackson’s forecast and its implications for Nvidia’s stock.

Nvidia’s Growth Potential: Jackson’s optimism stems from Nvidia’s strong performance and promising future prospects. He anticipates robust earnings reports in August and November, driven by continued demand for the company’s H100 and H200 chips. Additionally, the introduction of Nvidia’s new AI-focused Blackwell chips is expected to further bolster the company’s earnings.

Demand for AI and Chips: The demand for Nvidia’s chips is a key factor in Jackson’s forecast. Nvidia founder Jensen Huang has emphasized the strong demand trends for the company’s products. If Nvidia’s earnings reports meet expectations, Jackson believes investors will be willing to pay a higher price-to-earnings multiple for the stock. Currently, Nvidia trades at a forward PE of approximately 50 times, nearly twice the broader market multiple.

Market Cap Milestones: Nvidia has achieved significant milestones this year. On June 18, its market cap reached a remarkable $3.34 trillion, surpassing Microsoft (NASDAQ:MSFT) to become the world’s most valuable company. Although Nvidia has since lost this title to Apple (NASDAQ:AAPL) and Microsoft, its impressive performance has garnered few detractors on Wall Street.

Positive Analyst Insights: Analysts like KeyBanc’s John Vinh have expressed positive sentiments about Nvidia’s future. Vinh highlighted that despite the upcoming launch of Blackwell in the second half of 2024, there are no indications of a demand slowdown. The demand for H100 remains strong, with rush orders continuing, and interest in the GB200 is exceeding initial expectations.

Skeptics and Competition: However, not all analysts share this bullish outlook. New Street Research analyst Pierre Ferragu recently downgraded his rating on Nvidia to Neutral, citing valuation concerns. Ferragu sees limited further upside based on supply chain insights and suggests that the bullish case for Nvidia may not materialize beyond 2025.

Furthermore, Nvidia’s success has attracted competitors, which could pose challenges to the company’s dominance. Goldman Sachs asset manager Brook Dane cautions that competition is inevitable, and Nvidia will need to navigate this landscape to maintain its leading position.

Conclusion: Nvidia stock has experienced an impressive rise, and experts like Eric Jackson believe it has the potential to soar even higher. With strong earnings anticipated and sustained demand for its cutting-edge chips, Nvidia could achieve a market cap of $6 trillion by year-end. While there are some concerns about valuation and increasing competition, Nvidia’s track record and innovative products position it well for continued success. Investors will closely monitor the company’s upcoming earnings reports and market performance to assess whether this optimistic outlook will materialize.