Will Nvidia be the first company to reach $4 trillion market cap? Analysts raise the stakes
Will Nvidia be the first company to reach $4 trillion market cap? Analysts raise the stakes . At the close of trading on November 20, the chip maker will release its much-anticipated third-quarter report. Despite setbacks with its GPUs and Blackwell chips, the tech giant is expected to perform strongly
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With the U.S. elections and the Federal Reserve meeting behind us, investors have November 20 circled on their calendars. On Wednesday, at the market close, Nvidia will release its third-quarter earnings, its first report as a member of the Dow Jones. While waiting for the company to disclose its figures to investors, analysts have made their predictions. Citi, Morgan Stanley and HSBC have upgraded their valuations. Following the latest price target updates, all three banks put Nvidia’s market capitalization at over $4 trillion, a milestone that no publicly traded company has managed to date.

Quarter after quarter, the chip maker has become one of the most important references for investors. The company that, up until a few years ago, was only known to the gamer world has joined the race in the AI business. With a stock market value of close to $3.5 trillion and gains of 195% so far this year, Nvidia has reaffirmed its position as the most valuable listed company, ahead of tech giants such as Apple ($3.4 trillion) and Microsoft ($3.09 trillion). These high valuations increase the risk that any stumble could lead to an earthquake. This is what happened last August, when Nvidia reported record revenue and net income, but its growth forecasts were below market estimates, causing it to lose close to $200 billion in a single day.

HSBC’s Frank Lee is among the most optimistic analysts. In addition to advising investors to buy Nvidia shares, he continues to see a way forward and sets a Wall Street price target of $200, up from $145. In other words, he believes that the company could rise 40.9%, above the 10.5% suggested by the consensus of firms that follow the stock and which see Nvidia’s shares topping at $157.53. In his latest report, Lee applauds the company’s continued growth and makes special mention of its data center line of business. “Growth is not yet over despite being in uncharted territory as the AI train is back on track.”

Following the release of the second quarter report, investors were concerned about delays in the 2025 AI graphics processing unit (GPU) roadmap and problems with the manufacturing of Blackwell, its next-generation chip model. HSBC believes that supply chain concerns have abated and that the company has made the appropriate adjustments.

Meanwhile, Citi raised Nvidia’s target price by 13.3% and expects total and data center sales for the third quarter to range between $29 and $33 billion, below the $30-34 billion established by the consensus. Citi analysts point out that, although the company has resolved the problems affecting the performance of its Blackwell chips, it still has supply constraints. Despite this more cautious view, Citi reiterates its recommendation to buy Nvidia shares. The decision came before news broke Monday that Blackwell chips overheat in servers, a problem that could cause delays in data center deployments by some of its customers, and which sent Nvidia shares down nearly 3% shortly after Wall Street opened.

Morgan Stanley continues to see Nvidia shares up to $160, higher than the previous $150. Although the company continues to suffer from supply chain problems, Morgan Stanley is optimistic and expects another quarter of great figures along with upward revisions to the outlook. Rather than on the third quarter figures, which could be a transitional period, at Morgan Stanley they look to the medium term and expect the Blackwell cycle to continue to drive upside. The bank’s analyst believes that the firm’s 75% gross margin adjustment made last August could be a conservative forecast and that costs stemming from design issues on next-generation chips will not be repeated.

If analysts’ forecasts come true and Nvidia’s shares rebound to the $160-200 range, the company led by Jensen Huang could reaffirm its reign as the most valuable company with a market cap of $4 trillion. According to Bloomberg data, 28 of the analysis firms that set prices for the company see Nvidia’s stock market value above that level, higher than the 11 analysis firms that expect it for Apple, and nine out of ten firms (89.5%) that issue recommendations on Nvidia advise buying its shares, compared to 7.9% that choose to keep them in the portfolio.

Nvidia’s accounts come at a particularly sweet time for Wall Street. Donald Trump’s election victory and the earnings campaign have accelerated the rally in U.S. equities. More than 70% of the S&P 500 firms that have released their reports have beaten market forecasts, a trend that could continue if the president-elect’s tax cut is implemented. In the first two weeks of November, the Dow Jones has managed to surpass the 44,000-point barrier and the S&P 500 the 6,000-point mark. Along the way, up to 10 listed companies (Nvidia, Apple, Microsoft, Alphabet, Amazon, Aramco, Meta, Tesla, Berkshire Hathaway and TSMC) have surpassed the trillion-dollar barrier.

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2024-11-19
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At the close of trading on November 20, the chip maker will release its much-anticipated third-quarter report. Despite setbacks with its GPUs and Blackwell chips, the tech giant is expected to perform strongly
Will Nvidia be the first company to reach $4 trillion market cap? Analysts raise the stakes