Surely Nvidia stock can’t just keep rising?

Nvidia has been one of the hottest stocks on the market. But what could this year and beyond have in store for the chipmaker?

| More on:

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.

Image source: NVIDIA

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.

For a brief period on 5 June, Nvidia (NASDAQ: NVDA) surpassed Apple as the world’s second most valuable company by market-cap as its stock continues to soar.

At one stage, the company was valued at $3.01trn, trumping Apple, which finished the day valued at $3trn.

It has since retreated. However, with its share price rising 209.2% in the last 12 months and 3,187% over the last five years, I wouldn’t be surprised to see it make another surge soon. It may challenge Microsoft, which is the most valuable public American company at $3.14trn.

Passive income stocks: our picks

Do you like the idea of dividend income?

The prospect of investing in a company just once, then sitting back and watching as it potentially pays a dividend out over and over?

If you’re excited by the thought of regular passive income payments, as well as the potential for significant growth on your initial investment…

Then we think you’ll want to see this report inside Motley Fool Share Advisor — ‘5 Essential Stocks For Passive Income Seekers’.

What’s more, today we’re giving away one of these stock picks, absolutely free!

Get your free passive income stock pick

But what could 2024 have in store for its share price? Surely it can’t just keep rising?

Room for more growth?

Well, plenty of brokers seem to think so. For example, HSBC recently lifted its target price for the stock to $1,350. At the time, that represented a 49.3% premium. In under the space of almost a month, Nvidia has closed that gap and it now represents an 11.6% premium.

Quite frankly, if the stock keeps up this incredible form, where it finishes come the end of 2024 is anyone’s guess.

The next wave of growth

But looking past this year, what could the next decade have in store?

Well, there’s no doubt in my mind the artificial intelligence (AI) sector will keep booming and Nvidia will be at the forefront of this. In its latest results, founder and CEO Jensen Huang said “the next industrial revolution has begun” and that the firm was primed for its “next wave of growth”.

Titans such as Google, Microsoft, and Tesla are queuing up to get their hands on more Nvidia products and demand doesn’t seem to be slowing anytime soon. Analysts forecast revenue to top a staggering $156bn by 2026. It’s fairly easy to see why.

All just hype?

But while it’s easy to get excited about Nvidia, I’m incredibly cautious. Its share price has skyrocketed but is that just carried away investors pushing the stock up? Has it gone too far, too soon?

It’s more expensive than all of its Magnificent Seven peers when looking at key valuation metrics, such as the price-to-earnings ratio.

While it seems like a slowdown in growth isn’t possible right now, I’m sure it’ll come. At that point, we could see its share price nosedive.

A conundrum

I’m holding off from buying any more shares in Nvidia for the time being. At its current price, and given the hype the company’s receiving, I’m cautious we could see its share price recoil at some point. Of course, if Nvidia keeps beating expectations, I could be wrong.

That does leave me with a conundrum. I’m currently sitting on a 180.2% paper gain with my Nvidia position. I can do two things. I could take some profit and use it to reinvest elsewhere. My portfolio needs some pruning, so this could make sense.

On the other hand, I could sit tight and hope its share price keeps going higher. That said, I don’t want to be greedy. I also don’t want to attempt to time the market. I fear that could be a mug’s game. I’ll have to decide over the coming days what steps I plan to take next.

This AI stock is becoming a digital juggernaut in a £ 12.5 billion market!

🤖 Curious about the next big player in AI? 🤖

Our leading industry analysts have uncovered a trailblazing content platform that's revolutionising the industry with its unparalleled generative AI technology, setting new standards in creativity and efficiency.

Care for a sneak peek?

Trusted by global giants like Amazon, Disney, and Netflix, this innovative company is not just transforming digital media with AI-generated 3D content but is also capturing a significant share of a £12.7 billion market!

With a remarkable 62% gross margin, indicating exceptional profitability and operational efficiency, this company's growth trajectory positions it as a must-watch for savvy investors.

Best of all, we're offering exclusive access to the name of this game-changing stock, absolutely free!

Discover your free AI stock pick

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.

HSBC Holdings is an advertising partner of The Ascent, a Motley Fool company. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Charlie Keough has positions in Apple, HSBC Holdings, and Nvidia. The Motley Fool UK has recommended Alphabet, Apple, HSBC Holdings, Microsoft, Nvidia, and Tesla. 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

At a 52-week low but forecast to rise 73%! Is this growth share the FTSE’s top recovery play? 

This FTSE 100 growth share has taken an absolute beating over the past two years but Harvey Jones says the…

Read more »

Investing Articles

This FTSE 250 share offers a juicy 9.8% yield. Will it last?

This well-known FTSE 250 share has a percentage dividend yield approaching double digits. Should Christopher Ruane add the income share…

Read more »

Investing Articles

Is a £333,000 portfolio enough to retire and live off passive income?

A third of a million pounds can generate a serious amount of passive income, but relying on this sum alone…

Read more »

The flag of the United States of America flying in front of the Capitol building
Investing For Beginners

Why FTSE 100 investors should pay attention to ‘Liberation Day’

Jon Smith explains why the upcoming tariff announcement from across the pond could have an impact on the FTSE 100,…

Read more »

Concept of two young professional men looking at a screen in a technological data centre
Investing Articles

Here’s why Nvidia stock fell 13% in March

The Nvidia stock price rise was looking unstoppable. Should investors now be wondering if the same might be true of…

Read more »

US Stock

It’s ISA deadline week! Here’s my 3-step game plan

Jon Smith tries to calm the hype around the last minute ISA rush to buy stocks and explains why he's…

Read more »

Snowing on Jubilee Gardens in London at dusk
Investing Articles

£10,000 invested in BAE Systems shares at Christmas is now worth…

BAE Systems shares have been surging in the FTSE 100 in 2025, driven higher by the wavering US commitment to…

Read more »

Investing Articles

Up 19% in 2 weeks, can the Tesla share price rebound further?

Tesla's first-quarter delivery numbers came out today. Will they help persuade our writer to invest his money at the current…

Read more »