We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Why to Buy Nvidia Even After 220% YTD Jump? ETFs in Focus
Read MoreHide Full Article
The NVIDIA (NVDA - Free Report) stock is a blockbuster this year as it has skyrocketed 220.4% courtesy of high hopes from artificial intelligence (AI). A surge in Hyperscale demand and a solid uptake of AI-based smart cockpit infotainment solutions are acting as tailwinds.
No wonder, Nvidia’s Q2 earnings were much-awaited and the chipmaker didn’t disappoint investors. Yes, Nvidia breezed past analysts’ expectations. Not only this, Nvidia said that there will be 170% sales jump in the third quarter thanks to the demand for AI chips (read: Nvidia Earnings Show AI Boom Is Here to Stay: ETFs in Focus).
Inside Nvidia’s Huge Success in 2023
The year 2023 can easily be attributed to the AI euphoria. While many began to fear that the AI boom was fully priced in at the current level and that the AI mania would take time to fully materialize, Nvidia's success in Q2 proves otherwise.
NVIDIA rules the AI chip market with over 80% market share, according to some estimates, quoted on CNBC. However, the availability of NVIDIA's chips is currently limited, as major tech giants, cloud service providers, and emerging startups all are eyeing GPU capacity for advancing their individual AI models.
The AI market is thriving with deals and partnerships. Nvidia itself has been entering into numerous partnerships in the AI space. The companies that are collaborating with Nvidia are Amazon, Adobe, Google Cloud, Microsoft, Snowflake and AT&T.
While big tech giants have binged on large language model (LLM) AI, NVIDIA recently revealed a new AI chip that will lower the cost of running LLMs significantly, per a CNBC article. “This processor is designed for the scale-out of the world’s data centers,” NVIDIA CEO Jensen Huang said Tuesday, CNBC quoted.
How Are NVIDIA’s Prospects?
NVIDIA has a Zacks Rank #1 (Strong Buy) and it is a growth and momentum stock. NVIDIA’s expected growth rate for current year is expected to be 145.2% versus the semiconductor industry’s growth rate of a decline of 4% and the S&P 500’s growth rate of positive 8.78%. NVIDIA’s expected growth rate for next year is 48.72% versus the expected growth rate of 6.90% for the industry and 16.69% for the S&P 500.
Is Nvidia’s Value Quotient Improving?
At the current level, Nvidia shares are trading at the equivalent of around 33 times expected earnings over the next 12 months, according to Refinitiv data, per Reuters. That forward PE compares to over 46 a week ago, and it is now at its lowest since December 2022. More compelling valuation makes Nvidia an intriguing bet.
What Does the Broker Rating Say?
NVIDIA currently has an average brokerage recommendation (ABR) of 1.13 on a scale of 1 to 5 (Strong Buy to Strong Sell), calculated based on the actual recommendations (Buy, Hold, Sell etc.) made by 36 brokerage firms. The current ABR compares to an ABR of 1.24 a month ago based on 35 recommendations.
Of the 36 recommendations deriving the current ABR, 32 are Strong Buy and three are Buy. Strong Buy and Buy respectively account for 88.89% and 8.33% of all recommendations. A month ago, Strong Buy made up 82.86%, while Buy represented 8.57%.
Despite having a "buy" rating on Nvidia, Benchmark Research analyst Cody Acree indicated that Nvidia’s dependence on Taiwanese chip foundry (TSMC), which also caters to Apple and other big customers, as a factor that could keep Nvidia from selling as many of its high-end chips as it wants. "It's not just demand, but what they can actually deliver," Acree said, per Reuters, quoted on Yahoo.
Image: Bigstock
Why to Buy Nvidia Even After 220% YTD Jump? ETFs in Focus
The NVIDIA (NVDA - Free Report) stock is a blockbuster this year as it has skyrocketed 220.4% courtesy of high hopes from artificial intelligence (AI). A surge in Hyperscale demand and a solid uptake of AI-based smart cockpit infotainment solutions are acting as tailwinds.
No wonder, Nvidia’s Q2 earnings were much-awaited and the chipmaker didn’t disappoint investors. Yes, Nvidia breezed past analysts’ expectations. Not only this, Nvidia said that there will be 170% sales jump in the third quarter thanks to the demand for AI chips (read: Nvidia Earnings Show AI Boom Is Here to Stay: ETFs in Focus).
Inside Nvidia’s Huge Success in 2023
The year 2023 can easily be attributed to the AI euphoria. While many began to fear that the AI boom was fully priced in at the current level and that the AI mania would take time to fully materialize, Nvidia's success in Q2 proves otherwise.
NVIDIA rules the AI chip market with over 80% market share, according to some estimates, quoted on CNBC. However, the availability of NVIDIA's chips is currently limited, as major tech giants, cloud service providers, and emerging startups all are eyeing GPU capacity for advancing their individual AI models.
The AI market is thriving with deals and partnerships. Nvidia itself has been entering into numerous partnerships in the AI space. The companies that are collaborating with Nvidia are Amazon, Adobe, Google Cloud, Microsoft, Snowflake and AT&T.
While big tech giants have binged on large language model (LLM) AI, NVIDIA recently revealed a new AI chip that will lower the cost of running LLMs significantly, per a CNBC article. “This processor is designed for the scale-out of the world’s data centers,” NVIDIA CEO Jensen Huang said Tuesday, CNBC quoted.
How Are NVIDIA’s Prospects?
NVIDIA has a Zacks Rank #1 (Strong Buy) and it is a growth and momentum stock. NVIDIA’s expected growth rate for current year is expected to be 145.2% versus the semiconductor industry’s growth rate of a decline of 4% and the S&P 500’s growth rate of positive 8.78%. NVIDIA’s expected growth rate for next year is 48.72% versus the expected growth rate of 6.90% for the industry and 16.69% for the S&P 500.
Is Nvidia’s Value Quotient Improving?
At the current level, Nvidia shares are trading at the equivalent of around 33 times expected earnings over the next 12 months, according to Refinitiv data, per Reuters. That forward PE compares to over 46 a week ago, and it is now at its lowest since December 2022. More compelling valuation makes Nvidia an intriguing bet.
What Does the Broker Rating Say?
NVIDIA currently has an average brokerage recommendation (ABR) of 1.13 on a scale of 1 to 5 (Strong Buy to Strong Sell), calculated based on the actual recommendations (Buy, Hold, Sell etc.) made by 36 brokerage firms. The current ABR compares to an ABR of 1.24 a month ago based on 35 recommendations.
Of the 36 recommendations deriving the current ABR, 32 are Strong Buy and three are Buy. Strong Buy and Buy respectively account for 88.89% and 8.33% of all recommendations. A month ago, Strong Buy made up 82.86%, while Buy represented 8.57%.
The ABR of 1.13 is pretty upbeat compared with 1.95 ABR held by the semiconductor industry and 9.99 ABR held by the S&P 500.
Any Wall of Worry?
Despite having a "buy" rating on Nvidia, Benchmark Research analyst Cody Acree indicated that Nvidia’s dependence on Taiwanese chip foundry (TSMC), which also caters to Apple and other big customers, as a factor that could keep Nvidia from selling as many of its high-end chips as it wants. "It's not just demand, but what they can actually deliver," Acree said, per Reuters, quoted on Yahoo.
ETFs in Focus
Zacks Rank #2 (Buy) VanEck Semiconductor ETF (SMH - Free Report) – NVIDIA has 19.84% Focus
AXS Esoterica NextG Economy ETF (WUGI - Free Report) – NVIDIA has 18.25% Exposure
Simplify Volt RoboCar Disruption and Tech ETF (VCAR - Free Report) – NVIDIA has 14.05% Exposure
Global X Robotics & Artificial Intelligence ETF (BOTZ - Free Report) – NVIDIA has 13.29% Exposure
Zacks Rank #2 Pacer Data and Digital Revolution ETF (TRFK - Free Report) – NVIDIA has 13.09% Exposure