After hitting a high of $140 in June, Nvidia (NASDAQ: NVDA) shares have fallen following market-wide selling pressure and reports that the launch of Nvidia’s next-generation Blackwell chips may be delayed.
Nevertheless, UBS is maintaining its $150 price target and “buy” rating. Such price targets are typically just estimates of where analysts think a stock will be in the near term. The firm’s research suggests investors may be underestimating Nvidia’s earnings growth potential over the next few years.
Is Nvidia stock a buy?
UBS believes initial shipments of Blackwell may be delayed until the end of January, but this shouldn’t hurt Nvidia’s bottom line in the short term, as the company can still sell more H200 graphics processing units (GPUs) to customers for use in artificial intelligence (AI) until Blackwell is available.
The company sees the strong commitment of AI researchers and growing demand from enterprises as positive signs for NVIDIA’s business. In fact, the growing demand for AI to train computers is not slowing down. AI models are not as sophisticated as they were a decade ago, and the growing demand for AI training in data centers is the biggest driver of NVIDIA’s revenue growth.
Still, if Nvidia acknowledges Blackwell’s delay in its next earnings report on Aug. 28, it could bring new uncertainty to Nvidia’s business outlook, limiting any upside in the stock and potentially leading to a temporary sell-off.
UBS’s price target suggests a 27% upside from the current share price of $118, which puts Nvidia at a lofty 54 times forward earnings. With the stock priced this high, Wall Street traders will likely be looking for an excuse to lock in profits and sell, no matter how good Nvidia’s long-term growth prospects look at the moment.
Given that negative news could impact Nvidia’s stock price in the short term, it may be a good idea to wait until its next earnings report is released before buying shares.
Should I invest $1,000 in Nvidia right now?
Before you buy Nvidia stock, consider the following:
The analyst team at Motley Fool Stock Advisor has identified 10 stocks that investors should buy right now, and Nvidia is not among them. The 10 selected stocks have the potential to generate big gains over the next few years.
Consider the date when Nvidia made this list: April 15, 2005… If you had invested $1,000 at the time of recommendation, you would have made $723,545!*
Stock Advisor gives investors an easy-to-follow blueprint for success, with portfolio construction guidance, regular updates from analysts, and two new stock picks every month. The Stock Advisor service has more than quadrupled S&P 500 returns since 2002*.
The story continues
View 10 stocks »
*Stock Advisor returns as of August 12, 2024
John Ballard invests in Nvidia. The Motley Fool invests in and recommends Nvidia. The Motley Fool has a disclosure policy.
One Wall Street Firm Predicts NVIDIA Shares Will Hit $150: Is It a Buy? was originally published by The Motley Fool.