Following an outstanding earnings print by technology stalwart Nvidia (NASDAQ:NVDA), NVDA stock really had nowhere to go but up. In addition, the company’s specialty in graphics processing units (GPUs) and their implications toward undergirding innovations in artificial intelligence (AI) and machine learning helped briefly turn Nvidia into a trillion-dollar enterprise.
However, a rather weak performance during the midweek session — which saw NVDA stock dip almost 4% — presents the first sign that not all may be well. Specifically, several market observers expressed concerns about the valuation. According to data from Gurufocus, NVDA trades at over 200 times trailing earnings. And it’s priced at nearly 53 times projected earnings.
In addition, for the fiscal year that ended January 2023, Nvidia posted revenue of $26.97 billion. However, its current market capitalization stands at just under $954 billion. Not surprisingly, some investors have questioned the wisdom of acquiring NVDA stock at such a rich premium. As a result, market experts share varying views about the underlying enterprise’s trajectory.
Wall Street Titans Debate NVDA Stock
Although Nvidia represents a promising tech juggernaut aligned with the next generation of digital innovations, Ark Invest’s Cathie Wood took a more realistic approach to NVDA stock. According to CNBC, her flagship Ark Innovation ETF (NYSEARCA:ARKK) exited NVDA entirely in early January.
In addition, ARK Autonomous Technology & Robotics ETF (BATS:ARKQ) trimmed exposure to NVDA stock following last week’s forecast beat, which was catalyzed because of chip demand for AI-specific applications. In Woods’ view, NVDA simply traded at too lofty a valuation.
Interestingly, on the flip side, Citi’s Atif Malik agrees that at 50 times the 12-month earnings expectation, NVDA stock trades at a premium relative to its five-year average of 39.2 times. However, Malik stated that there’s “more untapped total addressable market in sight.”
Overall, the expert cited Nvidia’s AI-centric chips and supercomputer as justification for the bullish assessment. Currently, Malik’s price target for NVDA stock lands at $420.
Other Analysts Weigh in on Nvidia
According to data from TipRanks, NVDA stock carries a consensus view of strong buy. This assessment breaks down as 33 “buys,” four “holds” and zero “sells.” Additionally, the experts’ average price target clocks in at $441.84, implying over 15% upside potential. Below are some notable individual ratings:
- On the high side, HSBC’s Frank Lee anticipates a price target of $600. If reached, NVDA stock would enjoy a return of over 55% from the time of writing. Previously, Lee had a target of $355 per share.
- On the low end (within the last three months), Exane BNP Paribas’ David O’Connor pegged NVDA dropping to $230, implying over 40% downside. However, this view represented an upgrade to “neutral” from “underperform.”
- Around the average target is Goldman Sachs’ Toshiya Hari, who anticipates NVDA hitting $440. This view represented a price hike from the prior view of $275.
Among the recent pensive views, Stifel Nicolaus’ Ruben Roy rated NVDA stock as a “hold” three days ago. The expert also placed a price target of $370, implying over 4% downside risk.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
