Nvidia CEO Jensen Huang will report second-quarter results on Wednesday as demand for processors for the generative AI era booms. Kim Kulish/Corbis/Getty Images
Nvidia stock will continue to rise, Bernstein’s Stacy Rasgon told CNBC.
The stock is cheaper than other semiconductor companies given its massive profits.
In addition to AI growth, the company will also get a boost from its product roadmap.
This is a machine translation of an article from our US colleagues at Business Insider. It was automatically translated and checked by an editor.
Nvidia’s sky-high valuations may spook investors, but the chipmaker’s stock will continue to rise, Bernstein senior analyst Stacy Rasgon told “CNBC„.
Nvidia is on the rise
At the beginning of January, the semiconductor company became the fourth most valuable company in the S&P 500 and reached new records. On Wednesday afternoon, the shares were trading at $556 (around €511) per share.
Although some have worried about how sustainable such high valuations might be, Rasgon is sticking to his $700 price target for Nvidia, arguing that the trend toward artificial intelligence will continue to boost performance.
“The stock price has tripled, but if you look at how much earnings have increased – earnings have increased, I don’t know, six or seven times, or whatever the number is, because of the size of the opportunity, their competitive position within this opportunity, their product roadmap and everything else,” he said.
The recent earnings report Nvidia reported record sales of $14.51 billion (around €13.3 billion) for the third quarter, an increase of 279 percent compared to the same quarter last year. Given the pace at which earnings are outpacing the stock’s rise, this makes Nvidia’s multiples extremely attractive, Rasgon added.
Nvidia still a good AI investment
“Nvidia is actually one of the cheapest ways to play AI in this space,” he said. “AMD is a lot more expensive than Nvidia, Marvell is a lot more expensive than Nvidia, even Intel, they’re not that different from each other right now.”
Through 2023, Nvidia shares have climbed 223 percent, with the chipmaker one of seven mega-cap tech companies that helped the S&P 500 achieve extraordinary gains. Developments in artificial intelligence (AI) have given Nvidia a huge boost, as its semiconductors are often used to create the infrastructure for this new technology.
Rasgon highlighted the launch of new products that will keep the company at the forefront, such as the Grace Hopper superchip and an upcoming upgrade to the H200 graphics processor.
“I don’t know if the multiple can go any lower than it already is, frankly,” he told “CNBC„.
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