The tech sector continues to outperform the market as the AI race shows no signs of stopping. Nvidia (NVDA), in particular, has enormously benefitted from the increased demand for AI, with the chipmaking giant crossing a $3 trillion market capitalization and gaining more than 200% in just the last year. After a record year and mounting sky-high expectations, does Nvidia have more room to grow?
In the latest episode of Opening Bid, EMJ Capital founder Eric Jackson tells Yahoo Finance Executive Editor Brian Sozzi that this is just the beginning of Nvidia’s story. Jackson lays out his case for why Nvidia could double its market cap to $6 trillion this year and become the largest US company by a wide margin. He points out that the chip giant tripled its market cap in 2023 and has doubled it so far in 2024.
He explains, “We’re now kind of going up again with Nvidia, and it would not surprise me that we see another strong earnings report this fall… We’ll see evidence in the August report of initial appetite for the Blackwell chips, and we know that those things are priced higher than the H100s, H200s. So it might be then, but certainly by November we’ll have evidence of the real operating results.”
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Video Transcript
You were calling for or are calling you think a $6 trillion market cap for NVIDIA is possible.
Yeah, possible this year.
And so this year, the reason, yeah, by the end of the year and here, here’s my, hold on, hold on, hold on a second.
So wait, NVIDIA is a $3.2 trillion company and you see, you see six trillion by end of the year, I I could see this thing hitting up, you know, between 202 50 per share by the end of this year.
Uh And so the reason, the reason is that um in the last five years, if you go back and look at what, you know how the forward price earnings multiple has, has varied for NVIDIA over that five year period, uh you know, it, it and this is true for most stocks like you, you go through these like ups and downs constantly where there’s this like euphoric reaction to maybe they have this like incredible earnings report and suddenly like this, the company becomes very expensive on a go forward multiple basis and then they have like a more humdrum earnings report and suddenly they, you know, those forward multiples drop dramatically.
And despite the fact that obviously the stock price for NVIDIA has like, just been ripping for over a year now since like May of 2023.
And it’s, I don’t know, it tripled last year and I think it’s doubled this year.
Um The forward multiple has actually been below the mean for most of that move.
Uh In other words, like on a go forward basis, it’s almost like Wall Street has.
I thought this was gonna be like, kind of like, ok, they had another good quarter, but in that, it’s gonna slow down significantly from here and we’re gonna kind of go back to, you know, uh, you know, very low levels that and in terms of like how they were pricing this thing, it is, we’re not.
And, and yet, like over that five year period, there have been three times where the forward multiple has gotten up to like, uh, there was one time, it was like 55 times forward earnings, one, it was like 63 times, uh, forward earnings when it peaked out.
And there was one time where it almost got to 70 times, uh, forward earnings.
Uh, and then it kind of quickly receded most of most of the last year.
This thing has been like one standard deviation below the mean on a go forward basis.
And just right now, this thing is about 39 times forward earnings 40 times, which puts it right at the mean.
So my belief is that, you know, we’re now kind of going up again with NVIDIA and I, it would not surprise me uh to uh that we see another uh strong earnings report this fall from that, that would be a seismic event.
I I’ve, I mean, adding $3 trillion in market cap inside of year, it’s, it’s a whole other company like three other three or four other companies.
So, I mean, do you see like is it the next s report?
Is that that seismic shock?
I mean, where orders just really, almost like we saw last year they came out and they blew everything away, re reset guidance up and just change.
Everybody’s thinking on the name.
Well, step away from the, the market, the dollars of market cap that, that are being added and just think of it from percentage terms like last year, NVIDIA basically tripled.
Like I said, this year, it’s doubled and I’m talk, I’m saying like it could double again between now and the end of the year.
And so it’s either gonna be at the August earning the next earnings is in August and then the one after that I think uh is November.
Uh so, you know, I, I, I’m not sure, but I think definitely, you know, we’ll, we’ll see evidence in the August report of initial appetite for the Blackwell ships and we know that those things are priced higher than the H one hundreds H two hundreds.
Um, so it might be then, or, or, you know, but, but certainly by November we’ll have evidence of like the real operating results and we’ll find out if some of these bears on NVIDIA who are saying like, oh, well, people have just been double, triple ordering and it’s gonna come back to Earth is right?
Or, uh, we’re gonna find out that, well, there’s still insatiable demand for these chips and this thing isn’t gonna let up real soon.
And the margins on Blackwell are even like better than what, you know what they’ve been delivering for the last year, which has already like blown our socks off.
And so I think again, like, I don’t know if it’s gonna be August, I don’t know if it’s gonna be in November, but I think there is gonna be this euphoric reaction and if it, so it goes back to, uh, 65 X forward earnings.
You’re there, you’re, you’re there at like 250 per share.
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