HSBC, a prominent brokerage firm, has recently revised its target price for Nvidia stock, anticipating a potential surge to $1,350, marking a substantial increase of over 28%. This upward adjustment comes in light of Nvidia’s current share price of $1,096 on the NASDAQ. Despite the stock’s recent remarkable ascent of 127.5% in 2024 alone and an astonishing 2,912.5% over the past five years, HSBC remains bullish on its trajectory, projecting further growth.
The rationale behind HSBC’s revised target stems from Nvidia’s anticipated product advancements, particularly in its central processing unit and graphics processing unit (GPU)-based GB200. This updated target presents a premium of 23.2% over the current share price, reflecting HSBC’s confidence in Nvidia’s future performance.
Nvidia’s impressive performance in May, with a notable 27.7% increase in its share price, has largely been attributed to robust Q1 results. The company reported record quarterly revenue of $26 billion, marking a significant 262% year-on-year surge. Particularly noteworthy was the staggering 427% growth in revenue from its Data Centre segment, a pivotal growth driver for Nvidia in recent years.
The sustained demand for Nvidia’s products is evident, with major industry players such as Amazon, Tesla, and Meta expressing keen interest in its GPUs. Analysts foresee a continued upward trajectory in Nvidia’s earnings, with revenue projected to reach $156 billion by 2026.
However, amidst the optimism surrounding Nvidia’s prospects, concerns have been raised about a potential market bubble. The stock’s current price-to-earnings ratio of 64.1 surpasses that of its competitors in the Magnificent Seven, with Amazon trailing at 49.5. Additionally, Nvidia’s price-to-sales ratio of 34.2 exceeds industry peers.
While many brokers maintain a bullish outlook on Nvidia, it’s essential to exercise caution amid the possibility of inflated valuations driven by speculative fervor. Investors should remain vigilant, considering the potential for heightened volatility in the market.
