Nvidia Market Cap Could Hit $6 Trillion by Year-End

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Nvidia’s financial trajectory seems to be on the cusp of a monumental shift, potentially adding another $3 trillion to its market capitalization. This sentiment comes from Eric Jackson, the founder and president of EMJ Capital, who shared his insights on Yahoo Finance’s Opening Bid podcast. Jackson speculates that Nvidia’s current market cap of approximately $3.25 trillion could double by the end of the year, hitting a staggering $6 trillion. This projection hinges on the company’s upcoming earnings reports in August or November, which Jackson anticipates will showcase unabated demand for Nvidia’s H100 and H200 chips, along with the promising potential of its new AI-centric Blackwell chips.

Nvidia’s founder, Jensen Huang, hinted at strong demand trends in an interview with Yahoo Finance back in late May. If the earnings numbers meet expectations, Jackson believes investors might be willing to pay a significantly higher price-to-earnings (PE) multiple to own Nvidia’s stock. Currently, Nvidia trades at a forward PE of about 50 times, nearly double that of the broader market. Jackson posits that a euphoric reaction to the earnings reports could push the stock to 65 times forward earnings, translating to approximately $250 per share. Nvidia’s shares, at the time of this writing, are trading at $131, marking a year-to-date increase of over 170%.

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Nvidia has already witnessed an exceptional year. On June 18, the company’s market cap soared to an impressive $3.34 trillion, briefly surpassing Microsoft to become the world’s most valuable corporation. This milestone came shortly after Huang unveiled the company’s formidable Blackwell chips and announced Nvidia’s foray into building AI factories. Although Nvidia has since been overtaken by Apple and Microsoft, the enthusiasm around the company remains strong.

John Vinh, an analyst at KeyBanc, noted in a client memo that despite the upcoming launch of Blackwell in the second half of 2024, demand for H100 remains robust with continued rush orders. Additionally, the demand for GB200 chips has exceeded initial expectations. However, not everyone shares this bullish outlook. Pierre Ferragu, an analyst at New Street Research, recently downgraded Nvidia to a Neutral rating due to valuation concerns, suggesting limited further upside based on conversations with supply chain contacts. Ferragu mentioned that Nvidia’s bullish narrative might not fully materialize until beyond 2025, posing a risk to current expectations.

Compounding the challenge is the rising competition in the chip industry. Goldman Sachs asset manager Brook Dane cautioned that Nvidia’s success has not gone unnoticed and competitors are eager to challenge the chip giant.

The Nvidia saga continues to unfold, capturing the attention of both exuberant supporters and cautious skeptics. The coming months will be critical in determining whether Nvidia can meet the ambitious expectations set forth by its advocates.