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NVIDIA (NASDAQ: NVDA) stock is on fire right now. In the last six months, it has risen from around $440 to $739.
Could chip stocks hit $1,000 in 2024? Let's discuss.
A realistic goal?
If someone had asked me at the beginning of the year if Nvidia could reach $1,000 by 2024, I would have said probably not. Reaching that level would have required a 102% share price increase after last year's 239% gain.
However, today I don't think we can rule out this price level. At the current share price of $739, $1,000 is only a 35% gain away. And we've seen Nvidia produce that kind of return in a matter of weeks in the recent past.
Nvidia valuation
Looking at earnings forecasts, a share price of $1,000 wouldn't represent an unreasonable valuation. Today, Nvidia has a price-to-earnings (P/E) ratio of 35 using fiscal 2025 earnings per share (EPS) guidance of $21.40.
However, if the share price were to hit that new high, the P/E ratio would only be 47. That's not particularly excessive given that revenue and EPS are expected to grow 61% and 73% respectively this fiscal year .
Taking that 73% earnings growth rate, we would get a price-earnings-growth (PEG) ratio of 0.64 if the P/E ratio was 47. A PEG ratio less than one tends to indicate that a stock is cheap .
Of course, strong revenue/earnings guidance when the company releases its full-year results on February 21 could even raise EPS guidance for fiscal 2025. In this scenario, it would lower the P/E ratio needed for the share price reaches $1,000.
Broker Price Targets
However, I will note that I don't see any Wall Street companies with price targets for Nvidia of $1,000. As far as I know, the highest price target is currently $850. That's from analysts USB.
What's more, Nvidia is currently trading above the average price target ($630). This was not the case a few months ago. And it suggests that stocks may have risen too much too soon due to enthusiasm for artificial intelligence (ai).
I'll also point out that if Nvidia were to hit $1,000, it would put its market cap at about $2.5 trillion. This would make it the third largest company in the world. S&P 500 index behind microsoft and Apple.
That market cap would make it considerably larger than Alphabet (Google), which is currently capped at $1.8 trillion. That would be some achievement. It's worth noting that Alphabet's revenue this year is expected to be almost four times that of Nvidia.
My call
In conclusion, I think there is a chance for Nvidia's stock price to reach $1,000 in 2024. Given the momentum the stock has right now, a move to this level wouldn't surprise me.
However, my gut feeling is that it won't reach that level this year. I think it's more likely that it pulls back a bit from here and consolidates its recent gains.