Nvidia (NASDAQ: NVDA) stock is on fire at the moment. Over the last six months, it’s risen from around $440 to hit $739.
Could the chip stock hit $1,000 in 2024? Let’s discuss.
A realistic target?
If someone had asked me at the start of the year whether Nvidia could rise to $1,000 in 2024, I would have said probably not. Hitting that level would have required a share price increase of 102% after last year’s gain of 239%.
However today, I don’t think we can rule this price level out. At the current share price of $739, $1k is only a 35% gain away. And we have seen Nvidia produce that kind of return in a matter of weeks in the recent past.
Nvidia’s valuation
Looking at earnings forecasts, a share price of $1,000 wouldn’t represent a crazy valuation. Today, Nvidia has a price-to-earnings (P/E) ratio of 35 using the FY2025 earnings per share (EPS) forecast of $21.40.
If the share price was to hit that new high however, the P/E ratio would only be 47. That’s not particularly excessive given that revenue and EPS are forecast to grow 61% and 73% respectively this fiscal year.
Taking that earnings growth rate of 73%, we would get a price-to-earnings-to-growth (PEG) ratio of 0.64 if the P/E ratio was 47. A PEG ratio under one tends to indicate a stock’s cheap.
Of course, strong revenue/earnings guidance when the company posts its full-year results on 21 February could even see EPS forecasts for FY2025 raised. In this scenario, it would reduce the P/E ratio required for the share price to hit $1,000.
Brokers’ price targets
I will point out however, that I’m not seeing any Wall Street firms with price targets for Nvidia of $1,000. As far as I’m aware, the highest target price is currently $850. That’s from analysts at UBS.
What’s more, Nvidia is currently trading above the average price target ($630). This wasn’t the case a few months ago. And it suggests the stock might have run too far too soon on the back of artificial intelligence (AI) excitement.
I’ll also point out that if Nvidia was to hit $1,000, it would put its market-cap at about $2.5trn. This would make it the third-largest company in the S&P 500 index behind Microsoft and Apple.
That market-cap would make it considerably bigger than Alphabet (Google), which currently has a $1.8trn cap. That would be some achievement. It’s worth noting that Alphabet’s revenues this year are expected to be almost four times the size of Nvidia’s.
My call
In conclusion, I do think there’s a chance Nvidia’s share price could hit $1,000 in 2024. Given the momentum the stock has right now, a move to this level wouldn’t surprise me.
However, my gut feeling is that it won’t hit that level this year. I think it’s more likely to pull back a little from here and consolidate its recent gains.
