Nvidia (NASDAQ:NVDA), one of the world’s most valuable companies, is set to become a $2 trillion company by 2024, according to a stock forecast. With a transformative year behind them, Nvidia’s stock has surged over 200%, and the growth is expected to continue.
The driving force behind Nvidia’s success lies in accelerated computing and generative AI, which are fueling momentum in the cloud. As the industry leader, Nvidia remains ahead of its competition and is in a prime position to capitalize on the market opportunities in artificial intelligence.
The demand for AI chips is projected to grow at an unprecedented rate over the next decade. Taiwan Semiconductor forecasts a 20% revenue growth in FY24, attributing this growth to the boost in chip demand driven by artificial intelligence. Additionally, Advanced Micro Devices expects the market for AI chips to reach over $400 billion by 2027.
This favorable market outlook is excellent news for Nvidia. The company’s China-focused H20 AI chip is expected to be another significant driver of growth. With the tightening of U.S. export restrictions for semiconductor chips, Nvidia plans to flood the market with its AI chips in Q2 2024.
While competition in the AI chip market is a concern for Nvidia, the company’s dominant market share and consistent performance give it an edge. AMD, one of the contenders, is developing its series of MI300X AI chips but has yet to make significant headway. In contrast, Nvidia’s H100 GPUs currently hold between 80-95% market share.
Nvidia’s latest quarterly results showcase the company’s impressive growth. Data center revenue surged 279% year over year to reach $14.51 billion. For Q4 FY24, Nvidia is projecting $20 billion in sales, indicating over 200% growth from the previous year. The company’s H200 GPUs are set to be released in the second quarter of next year.
Despite the potential for further growth, some analysts believe that NVDA stock is currently overextended from a technical perspective. The stock’s trading price of 35 times sales and P/E ratio of 83 suggest that it may be relatively expensive. Prudent investors may consider waiting for dip buying opportunities in 2024 before initiating a position.
In conclusion, Nvidia’s stock forecast paints a positive picture for the company’s future. With accelerated computing, generative AI, and the growing demand for AI chips, Nvidia is poised for continued growth. While it may be prudent to wait for a potential dip in stock prices, there is no denying Nvidia’s position as a major player in the industry.
