ETFs
NVIDIA ETFs Rocked Last Week: What’s in Store? – June 24, 2024
The chip giant Nvidia (Quick quote NVDANVDA – Free report) is coming off a volatile week, first reaching all-time highs and then encountering a reversal. The stock was down 2.5% last week.
NVIDIA-rich ETFs like Strive US Semiconductor ETF (Quick quote SHOCSHOCK – Free report) , AXS Esoterica NextG Economy ETF (Quick quote WUGIWUGI – Free report) , Grizzle Growth ETF (DARP quick quoteDARP – Free report) And VanEck Vectors Semiconductor ETF (Quick quote SMHSMH – Free report) were down 0.3%, up 0.03%, down 0.8% and down 0.2% last week, respectively.
Despite this, Bank of America maintains a Buy rating with a $150 price target, highlighting NVIDIA as a “top pick,” as cited on Yahoo Finance. NVIDIA briefly in the lead Microsoft (Quick quote MSFTMSFT – Free report) as the world’s most valuable company last week, but closed with a market capitalization of around $3.12 trillion, slightly below Microsoft’s $3.33 trillion.
Some analysts warn of likely profit-taking but remain optimistic about NVIDIA’s long-term prospects. Excitement about AI could now create a bubble. This is especially true given research by venture capital firm Sequoia, which indicates that industries spent $50 billion on NVIDIA chips to train AI in 2023, but only reaped $3 billion of income. as quoted on Mint.
NVIDIA’s fate linked to ecosystem partners?
Patrick Moorhead of Moor Insights & Strategy told Yahoo Finance recently that investors should remain vigilant in the face of a possible decline in NVIDIA. However, he doesn’t expect the chip giant’s leadership on Wall Street to fade anytime soon, at least in the next six to nine months.
He highlighted the importance of downstream profitability for NVIDIA’s ecosystem partners, such as Adobe (ADBE quick quoteADBE – Free report) , Selling power (Quick quote CRMRCMP – Free report) , SAP (SAP quick quoteSAP – Free report) And ServiceNow (NOW Quick QuoteNOW – Free report) . He warned that the inability of these software companies to monetize new AI capabilities could harm NVIDIA’s growth trajectory, similar to what happened when the dot-com bubble burst in 2000.
In the performance of NVIDIA’s downstream partners
Adobe’s Zacks earnings estimate for 2024 has increased from $17.98 to $18.14 over the past seven days. Adobe shares rose 10.2% last month.
Salesforce’s Zacks Consensus Estimate for full-year earnings has risen from $9.71 to $9.89 over the past month, although the estimate has remained unchanged over the past week. CRM stock is down 13.7% in the past month, but has jumped 7.4% in the past week.
SAP’s Zacks Consensus Estimate for 2024 earnings has not changed over the past month or week. SAP has lost its winning momentum recently, as it has remained flat over the past month despite gaining 30% in the year to date.
Like SAP, the consensus earnings estimate for ServiceNow has also remained the same over the past 30 days. NOW shares are up a modest 9% this year, down 2.8% last month and 4.7% last week.
Overall, any positive sales signals from downstream players would further justify NVIDIA’s investment.
$4 Trillion Market Cap Likely for NVIDIA
Despite the disastrous stock performance – up 195% last year and more than 3,200% over the past five years – analysts like Moorhead believe NVIDIA could reach a market cap of $4 trillion. This optimism lies in continued investments in AI and data centers, as well as NVIDIA’s massive 80% market share in data center AI chips.
After all, the fundamentals are still in place for NVIDIA and the stock could rebound from its current levels. Wedbush analyst Dan Ives believes the AI revolution is only just beginning. He expects incremental spending on AI to reach $1 trillion over the next decade, with more than 70% of businesses eventually relying on AI. as quoted on Yahoo Finance.
Target price
Based on short-term price targets offered by 41 analysts, NVIDIA’s average price target stands at $124.79. Forecasts range from a low of $69.00 to a high of $150.00. NVIDIA’s last closing price was $126.57.