Could NVIDIA stock reach $743 in the next 12 months?
brought about by the artificial intelligence (AI) revolution nvidia (NVDA 2.16%) It is currently the world’s largest listed company with a market capitalization of approximately $5 trillion. Thanks to the stock split, the stock price is $205. But despite Nvidia’s historic performance over the past few years, there may be more upside ahead.
How much? Wall Street analysts have set a price target of $743 per share for 12 months. That’s a high number, to say the least. That’s more than three times the stock price today, and would give Nvidia an unprecedented valuation that would value it at more than $15 trillion.
Let’s take a look at what’s likely to drive such an ambitious price target and how likely it is that Nvidia stock will actually reach $700 per share next year.
Image source: The Motley Fool.
Vera Rubin boom is coming
Nvidia’s business is at an interesting juncture right now. The company’s next-generation AI chip platform, Vera Rubin, is in full production and ready to begin shipping in the coming months. Vera Rubin consists of a total of six chips that combine to create an AI supercomputer designed for agent AI and inference workloads. It also expands Nvidia’s chip footprint across server racks. This is a significant growth catalyst at a time when the AI industry is transitioning from training to inference.
NVDA Revenue (TTM) data from YCharts
CEO Jensen Huang said that Nvidia expects total orders between Vera Rubin and current-generation flagship architecture Grace Blackwell to reach $1 trillion by 2027. This massive pipeline represents tremendous revenue growth for Nvidia, which generated $253.5 billion in total revenue over the past 12 months.
Why target price is not the key
today’s change
(-2.16%)$-4.59
current price
$207.86
Key data points
market capitalization
$5.1T
work range
$207.67 – $211.48
52 week range
$142.03 -$236.54
volume
4.1 million
average volume
165.1M
gross profit
74.15%
dividend yield
0.13%
Of course, Nvidia stock could reach $700 next year, but that very much depends on valuation.
Nvidia trades at 20 times its last 12 months of sales, and even with all the growth expected, it would need to increase that ratio significantly to get its stock price to $700 next year. Stocks have previously traded at higher multiples on sales, but the bigger the numbers, the harder it is to hold on to them. $700 per share certainly seems possible, but probably not in the next 12 months.
But that shouldn’t be the main focus. Price targets are eye-catching, but investors should focus on the company’s broader direction instead. Nvidia is set to enter another phase of growth as Vera Rubin begins to impact sales over the next few quarters. That’s probably why 94% of 69 Wall Street analysts surveyed by CNN Business currently rate the stock a Buy. Wall Street isn’t always right, but for Nvidia, the future still looks bright enough to buy the stock.
