Over the past week, Nvidia (NASDAQ:NVDA) has hit yet another share price milestone. Thanks to a well received quarterly earnings release, Nvidia stock cracked the $1000 per share mark for the first time. The AI chip winner’s four-digit prices may not last. Luckily, there is no impending correction: Nvidia will split the stock 10-for-1 next month.
Pretty soon NVDA will be back at around the $100 per share mark. Better yet, although splits do nothing to make a stock’s fundamentals better or worse, there are unrelated catalysts in play that could drive an additional move higher for shares between now and year’s end.
Nvidia Stock, its Recent Earnings Release, and an Upcoming Stock Split
On May 22, Nvidia released its fiscal results for the fiscal quarter ending April 30, 2024. For the quarter, year-over-year revenue growth for the AI chip designer came in at a staggering 262%. On a sequential, or quarter-over-over, basis, revenue moved up a steady 18%.
GAAP earnings per share came in at $5.98, an increase of 629% compared to the prior year’s quarter, and up 21% on a sequential basis. Alongside yet another quarter of consensus-beating results, management made some other promising announcements.
For instance, revisions to revenue guidance for the current quarter ($28 billion) came in ahead of Wall Street forecasts, which prior to earnings were calling for $26.6 billion in revenue this quarter.
Nvidia also announced that it was raising its quarterly dividend by 150%. With this plethora of promising news, it’s no surprise that, much as we anticipated, the skeptics were proven wrong.
Results failed to fall short of perfection, sending Nvidia stock zooming well past the $1,000 per share mark after earnings.
Again though, NVDA is above $1000 per share, but only temporarily. Nvidia announced the aforementioned 10-for-1 stock split alongside results and guidance, with the effective split scheduled for June 7.
Two Reasons Why This Latest Rally has Runway
As we mentioned above, stock splits have zero impact on fundamentals. However, while a split alone will not make Nvidia more or less valuable, there are two strong reasons the latest NVDA rally could carry on post-split.
First, stock splits help to improve liquidity. While the impact of this on highly liquid mega cap Nvidia stock will be marginal, a share price in the low $100s will make it more accessible to retail investors and could provide somewhat of a boost.
Second, and more importantly, there are substantive catalysts in motion that could justify additional moves higher for NVDA shares. Currently, the dominant name in AI chips, the company is poised to maintain its dominance.
During this quarter and next quarter, high demand for Nvidia’s existing product offerings points to further earnings beats. This could help drive a continued steady climb for NVDA, even if growth begins to slow down on a year-over-year basis.
Two quarters from now, however, sales of Nvidia’s Blackwell series of AI accelerators will launch. Sales of these latest, greatest chip products will at point begin to have an impact on revenue and earnings. Blackwell’s debut could even lead to growth reacceleration.
The Verdict: With Another 50% Jump Within Reach, Stay Long and Strong With NVDA
Sell-side consensus calls for Nvidia’s earnings to more than double this fiscal year, rising by another 29.5% during the fiscal year ending January 2026.
However, depending on the success of the Blackwell chips, and the extent in which Nvidia’s sales to non-AI end user markets improve, analysts could soon make upward revisions to these forecasts.
Consensus could even rise to where the top end of forecasts are today: $30.35 per share in FY 2025, $47.53 per share in FY 2026 earnings.
Slap a low-30s multiple to the FY 2026 forecast, and the prospect of NVDA hitting a pre-split price of $1500, aka a post-split price of $150 per share, is not so far-fetched.
With this high level of potential upside within reach, there’s a clear verdict: stay long, and stay strong, with Nvidia stock.
Nvidia stock earns an A rating in Portfolio Grader.
On the date of publication, Louis Navellier had a long position in NVDA. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article.
The InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
