Nvidia Stock Outlook: Is Wall Street Bullish or Bearish?

Santa Clara-based chip giant Nvidia Corporation NVDA leads the semiconductor industry with a massive market cap of $2.3 trillion. Renowned for its high-speed graphics processing unit (GPUs), Nvidia serves gaming, data centers, and automotive markets. In mid-March, it unveiled Project Groot for humanoid robots, updated its Isaac platform, and launched Jetson Thor, showcasing its cutting-edge robotics and artificial intelligence (AI) innovations.

The mega-cap stock has significantly outperformed the broader market over the past 52 weeks. NVDA has gained 206.5% over this time frame, while the broader S&P 500 Index ($SPX) has rallied 27.5%. In 2024 alone, shares of NVDA are up 86.7%, compared to SPX's 11.2% gains on a YTD basis.

Zooming in further, NVDA’s triple-digit return also outpaced the S&P Semiconductor SPDR's XSD 27.1% gains over the past 52 weeks.

NVDA’s relatively strong price action can be attributed to its AI chip dominance and robust performance across industries, driven by high demand for advanced computing solutions and positive analyst outlooks for future growth. The company has undoubtedly emerged as one of the biggest beneficiaries of the AI wave. 

However, on May 7, NVDA stock briefly plunged 10.7% after Stanley Druckenmiller disclosed reducing his stake, citing market recognition. Nevertheless, investors saw this as a prime opportunity to capitalize on discounted shares, and the stock resiliently rebounded, closing the session with a mere 1.7% decline.

Most recently, shares of Nvidia fell on May 17, after chip rival Advanced Micro Devices, Inc. AMD scored a partnership with Microsoft Corporation MSFT for AI chips amid Nvidia's GPU shortage and soaring demand for AI processors.

For the current fiscal year, ending in January, analysts expect NVDA to report EPS growth of 92.2% to $22.76. Moreover, Nvidia has an excellent earnings surprise history. It beat the consensus estimate in each of the last four quarters. The chipmaker’s revenue and EPS beat Wall Street’s estimates in the last reported quarter, driven by a thriving AI business. 

The consensus view on NVDA has been bullish overall. Among the 40 analysts covering the stock, the consensus rating is a “Strong Buy.” That’s based on 35 “Strong Buy” ratings, two “Moderate Buys,” and three “Holds.”

This configuration is slightly more bullish than three months before, with 31 analysts suggesting a "Strong Buy" rating.

Earlier last week, HSBC reaffirmed a “Buy” rating on NVDA, raising its price target from $1,050 to a Street-high $1,350, indicating a 46% upside potential. The analyst noted that NVIDIA's earnings potential is undervalued and cited the upcoming transition to in-house central processing unit (CPU) and GPU products, along with a shift to higher average selling price (ASP) B series, as key growth drivers.

The mean price target of $986.01 represents a premium of just 6.6% to NVDA's current levels.

On the date of publication, Sristi Jayaswal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.