Nvidia Stock News and Forecast: Semi leader joins $1 trillion club as NVDA passes $400

Nvidia (NVDA) stock is the fifth company to join the $1 trillion market cap club on Tuesday. NVDA shares are up 3.6% at the time of writing in Tuesday’s premarket at $403.38. With 2.49 billion shares outstanding at the end of the most recent quarter, that would give Nvidia a market cap of $1.004 trillion.

NASDAQ 100 futures have gained 1.3% early Tuesday.

Nvidia stock news: Working on Memorial Day

Nvidia did not take the day off on Memorial Day. The company released a number of high-profile news releases, more than half a dozen over 48 hours beginning Sunday, that speak to how many different directions the leading semiconductor designer is moving all at once.

First, probably the biggest news is that Nvidia introduced more details regarding its newest supercomputer. The NVIDIA DGX GH200, an AI supercomputer that can be used to develop generative AI models and large analytic data sets, will be available by the end of 2023. It is thought that data center hyperscalers like Microsoft’s (MSFT) Azure, Amazon’s (AMZN) AWS, and Alphabet’s (GOOGL) Google Cloud will be the main customers. Interestingly, these are also three of the four members of the $1 trillion club.

Large language models like OpenAI’s GPT-4 require better compute, and the DGX GH200 is now the leading contender. The supercomputer combines 256 NVIDIA GH200 Grace Hopper Superchips with an architecture that allows it to work like a single GPU. The company says the new supercomputer has 500 times more memory and 48 times more bandwidth than its previous supercomputer released in 2020.

Another important announcement is that Nvidia is building a generative AI supercomputer at its data center in Israel. It will be used as a test run for Nvidia’s Spectrum-X networking platform for ethernet-based AI clouds.

"NVIDIA Spectrum-X is a new class of Ethernet networking that removes barriers for next-generation AI workloads that have the potential to transform entire industries," said Gilad Shainer, senior vice president of networking at Nvidia.

Then there’s Nvidia’s collaboration with Japan’s SoftBank (SOBKY). The companies are joining forces to build a generative AI platform for 5G and 6G applications that will be eventually installed at SoftBank’s Japanese data centers. The platform is said to greatly reduce energy and costs associated with wireless communications.

Lastly, Nvidia has partnered with marketing firm WPP to build a content engine for digital advertising. The content engine will use generative AI applications to allow marketing teams to develop advertising campaigns much more quickly than current technologies.

Nvidia stock forecast: Can NVDA add another 55%?

To put my cards out on the table, I have no real opinion on where the Nvidia stock price is going next. Part of this is that I don’t have the confidence to make a projection, and part of it is that I don’t like what the stock chart is telling me. This is because it’s telling me that NVDA stock could add another 55% from here. 

In Tuesday’s premarket, Nvidia stock has left the weekly R2 at $386.11 in the dust. The next stop is the R3 at $465.10. The ascending bottom trendline that NVDA has been using for support is all the way down at $288. But wait, it gets better.

NVDA weekly chart

This type of explosive growth leads us to furtively glance at the monthly chart. When we do, see that the trendline connecting the September 2020 and November 2021 highs that began Nvidia’s explosion in popularity leads directly to the monthly R5 at $623.10. Yes, that’s about 55% above the current price level, and this author feels embarrassed just talking about it. The truth is, however, that few of us saw Nvidia stock tacking on a 25% gain last week. That type of volatility is usually just left to penny stocks and small tech.

NVDA monthly chart

Yes, I know, this seems outlandish, but here’s the way it might happen. Last year’s revenue of $27 billion is expected to grow to more than $62 billion in 2025 (FY 2026). Earnings per share this year of $7.68 is expected to reach $12.23 a share in 2025. With both sales and profits exploding, the current price of 42 times next fiscal year earnings does not seem expensive to many investors for the primary company powering the AI revolution. Add on a suitably-timed buyback announcement, and NVDA could make it up to $623.10 in the next 18 months.