Nvidia (NVDA -2.25%) The company has been one of the best-performing stocks over the past few years, making it the world’s most valuable company. But in the past month or two, the company has slipped to second place and then — briefly — to third place behind two other big tech companies, Apple and Microsoft.
But don’t give up just yet on Nvidia, which has risen to second place with a market capitalization of $3.41 trillion. Many Wall Street analysts believe the best is yet to come for the company, a key supplier of chips to power artificial intelligence (AI). Here’s what they think about the company’s latest quarterly results.
Why analysts liked Nvidia’s results
While stock prices have fallen in recent weeks, smart investors should realize that this is just noise. Looking back at the company’s most recent quarterly results released on Dec. 6, pretty much everything is going well at Nvidia right now.
Wedbush analyst Dan Ives called the earnings report “perfect,” adding, “It should be framed and hung in the Louvre.” He also called CEO Jensen Huang the “godfather of AI” and called the company’s latest Blackwell AI chip the LeBron James of semiconductors.
Ives added: “NVIDIA has shown a path to a market cap of over $4 trillion, which is bullish for the broader tech rally through year-end and into 2025.”
Following the earnings report, analysts at three other firms – JPMorgan, DA Davidson and Bernstein – raised their price targets on the stock.
Davidson’s Gil Luria said, “Given hyperscalers’ comments about additional investments in AI computing and the company’s ability to achieve even with production slowdowns, NVIDIA is well positioned to extend growth into next year. ”.
Truist’s William Stein also said that NVIDIA “remains an AI company thanks to its culture of innovation, existing ecosystem, and significant investments in software, pre-trained models, and services.” .
Although the company’s stock price has fallen recently, Wall Street analysts remain very optimistic about the company’s long-term prospects. Should I buy a pullback? More on that next.
How to strategically invest in Nvidia today
There’s a big difference between a business doing well and a stock price doing well. Nvidia is poised to grow exponentially over the coming years and decades.
But the stock price already reflects much of this potential. Despite the company’s value exceeding $3 trillion, the company’s stock price is an astonishing 30 times sales. For comparison, Microsoft’s sales are only 13 times sales, while Apple’s sales are a relatively paltry 10 times.
Of course, Nvidia’s growth rate, both current and projected, is much better than either of these companies. And while the demand for AI infrastructure is growing rapidly, it’s probably still in its infancy. However, this stock has a high multiple, and that reality usually comes with significant volatility. Small changes in an industry or company’s growth prospects can have a large impact on valuation multiples and, in turn, stock prices.
If you believe in AI for the long term, this could be your chance to start building your spot at Nvidia. Don’t be shocked if there is a short-term opportunity to add to your investment when stock prices drop.
Also, consider adding other chip manufacturers to diversify your position. NVIDIA currently holds a commanding lead in AI semiconductors, but as previous chip wars have proven, the top spot won’t stay there forever.
Nvidia stock is currently trading better than it was a few weeks ago, but make sure you have fresh cash to buy more if short-term volatility returns, and diversify your position accordingly.
JPMorgan Chase is an advertising partner of Motley Fool Money. Ryan Vanzo has no position in any stocks mentioned. The Motley Fool has positions in and recommends Apple, JPMorgan Chase, Microsoft, Nvidia, and Truist Financial. The Motley Fool recommends the following options: A long January 2026 $395 call on Microsoft and a short January 2026 $405 call on Microsoft. The Motley Fool has a disclosure policy.
