2024 could be the biggest year in history for the Nvidia share price. Here’s why!

The Nvidia share price was a star performer on the US stock market last year. Royston Wild looks at the tech giant’s prospects for the new year.

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Young Asian man drinking coffee at home and looking at his phone

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

The spectacular rise of artificial intelligence (AI) stocks was one of the biggest investment stories of 2023. Chipmaker Nvidia (NASDAQ:NVDA) attracted most of the headlines last year, its share price rising a stunning 233% in value.

Today, the Nasdaq company is trading at around $481.70 a share. If it replicates last year’s performance it will end 2024 at $1,600.

Can Nvidia shares hit these heights? And should I buy the AI giant for my shares portfolio today?

Growth market

To quickly recap, Nvidia is a major manufacturer of graphics processing units (GPUs). These are critical in a wide range of computer-based applications. And they’re becoming especially popular in the realm of AI.

In a nutshell, these chips allow highly complex computational processes to be carried out. Deep learning frameworks (such as Google’s TensorFlow open-source machine learning library) rely on GPUs to accelerate the development of neural networks.

The AI market provides Nvidia with significant growth opportunities for the next decade and beyond. According to PwC, AI could contribute an astonishing $15.7trn to the global economy by 2030. That’s more than the current Chinese and Indian economies combined.

Strong trading

Image of an Nvidia AI-ready server. Source: Nvidia.
An Nvidia AI-ready server. Source: Nvidia.

Nvidia’s is acting quickly to capture this opportunity too. It’s a market leader in its field of AI-related tech and is investing boatloads in new tech to keep its crown. Analysts at Bloomberg have described its H100 chip as “the go-to workhorse for training the large language models undergirding apps like OpenAI’s ChatGPT“.

Investors are confident the company can continue growing sales and profits above expectations too. In its forecast-beating third-quarter update, Nvidia announced revenues of $18.1bn, up 206% year on year and driven by soaring demand for its AI products.

Premium rating

Like the company itself, Nvidia’s share price has exceptional momentum right now. But while it could rise further in 2024, I’m not planning to buy the shares for my portfolio.

Heavy investor interest means the tech giant now trades on a high forward price-to-earnings (P/E) ratio of 39.2 times. The market is pricing in the possibility of further estimate-smashing trading releases.

The danger is that any signs of weakness could result in sharp selling that sends the firm’s share price plummeting.

Danger signs

One potential threat is that production at Nvidia fails to keep up with the rate of demand. The firm is also facing intensifying competition as other tech giants try to muscle their way into the AI arena.

Intel, Microsoft, and Alphabet-owned Google are just a few companies designing their own chips (Google has even claimed its TPU chips are faster and more energy efficient than Nvidia’s tech).

Nvidia is also vulnerable to worsening relations between the US and major consumer China. This raises the spectre on further restrictions from Washington on the export of microchips.

And finally, a great deal of uncertainty hangs over how strict AI regulation will be. The US, China and the UK are all tipped to introduce their own ruling frameworks in the not-too-distant future. These could all cast doubts on current growth estimates for the AI industry.

While I like Nvidia shares, I’m not happy to buy them at current prices. I’d rather invest in other UK and US shares right now.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Alphabet, Microsoft, and Nvidia. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

This latest FTSE 100 dip could be an unmissable opportunity to pick up cut-price stocks

The FTSE 100 has pulled back with the government’s policy choices creating some negative sentiment. But this gives us a…

Read more »

A young woman sitting on a couch looking at a book in a quiet library space.
Investing Articles

As the WH Smith share price falls 4% on annual results, is it still worth considering?

WH Smith took a hit after this morning’s results left shareholders unimpressed. With the share price down 4%, Mark Hartley…

Read more »

Investing Articles

The Aviva share price just jumped 4.5% but still yields 7.02%! Time to buy?

A positive set of results has put fresh life into the Aviva share price. Harvey Jones says it offers bags…

Read more »

Investing Articles

Can a €500m buyback kickstart the Vodafone share price?

The Vodafone share price has been a loser for investors in recent years, and the dividend has been cut. We…

Read more »

Frustrated young white male looking disconsolate while sat on his sofa holding a beer
Growth Shares

3 mistakes I now avoid when choosing which growth stocks to buy

Jon Smith runs through some of the lessons he's learnt the hard way over the years about what to look…

Read more »

Warren Buffett at a Berkshire Hathaway AGM
Investing Articles

Should I follow Warren Buffett and sell my favourite shares?

Billionaire US investor Warren Buffett has been selling tons of Apple shares and other stocks of businesses he thinks are…

Read more »

Investing Articles

As like-for-like sales continue to fall, is the B&M European Value Retail SA (LSE:BME) share price a bargain?

B&M European Value Retail is known for its low prices, but could growing like-for-like sales make the share price the…

Read more »

Illustration of flames over a black background
Investing Articles

After rocketing 232% in a year can this red-hot FTSE 250 stock keep going gangbusters?

Harvey Jones says this FTSE 250 stock's on fire after smashing the index over the last year. It's cheaper than…

Read more »