Could Nvidia Stock Reach $150 Before 2024 Ends?

Nvidia's stock is on the verge of hitting a significant milestone.

Nvidia (NVDA) has experienced remarkable growth in 2024. At the start of the year, its stock was trading at approximately $50 per share, but it has soared to around $130. This leads to the question: can Nvidia reach $150 before the end of 2024, potentially achieving a second consecutive year of having its stock price triple?

Although it has some ground to cover, there are still plenty of trading days left in 2024, which could bring unexpected developments.

The Role of GPUs in AI Innovation

Nvidia's impressive rise is closely linked to the growing demand for artificial intelligence (AI). Numerous companies are racing to create cutting-edge AI models, while cloud computing giants are increasingly boosting their computing capabilities by acquiring Nvidia graphics processing units (GPUs).

GPUs excel in this area due to their capacity to perform numerous calculations simultaneously. By connecting thousands of GPUs in clusters, they can efficiently process complex AI tasks at high speeds.

However, GPUs are an expensive investment. For example, the H100, one of Nvidia’s most sought-after GPUs, is valued at about $25,000 each. When companies, like Tesla with its Dojo computer, deploy around 10,000 GPUs, the total expenditure can exceed $300 million when considering additional system components.

Despite this demand, GPUs are not a subscription service; therefore, Nvidia must consistently sell more units to maintain growth. A potential boost to Nvidia's sales could come from its new GPU architecture, Blackwell. This architecture is expected to provide significant advantages over the prior generation, Hopper, by using less energy and performing calculations more rapidly. This upgrade could encourage current customers to enhance their technology, leading to further sales growth.

The release of Blackwell has faced several delays, with the current timeline indicating that production will begin ramping up in the fourth quarter of 2024. Investors will be eagerly awaiting updates in late November when Nvidia releases its Q3 earnings for fiscal year 2025; this announcement could be pivotal in determining if the stock reaches $150 before the year's end.

Investor Expectations and Future Outlook

High expectations are driving Nvidia's current stock price. It is trading at 48.6 times its projected future earnings, indicating a significant premium compared to most companies, which typically do not retain such high valuations unless they achieve sustained rapid growth.

Companies trading at this premium face strict scrutiny; they either need to meet or exceed expectations, or face declining valuations if they fail to deliver on their promises. So far, Nvidia has managed to meet the high expectations set by investors, but it must continue this momentum into 2025 and beyond to satisfy shareholders.

The crucial question remains: can Nvidia reach $150 before the close of 2024? Given the excitement around AI, particularly if Nvidia’s Q3 earnings report (set for late October 2024) proves to be strong, this milestone seems achievable. Nevertheless, the outcome of the upcoming elections could significantly influence market reactions leading up to that earnings report, possibly swaying prices in either direction.

While the future is uncertain and many factors are at play, one thing remains clear: we are only scratching the surface of AI integration. As the demand for AI capabilities expands, the need for more GPUs will grow correspondingly. Therefore, even if Nvidia does not reach $150 by the end of this year, it is likely to achieve that goal sometime in 2025.

Note: The author may hold positions in Tesla. The content does not represent financial advice, and investors should conduct their own research.

Nvidia, Stocks, AI