NVIDIA Stock Hits Record Rally: Analysts Divided – Buy or Sell?

NVIDIA Stock Hits Record Rally: Analysts Divided – Buy or Sell?

The NVIDIA stock remains in rally mode. This year alone, the stock has surged by an impressive 164 percent on NASDAQ, reaching 130.78 USD as of the closing price on June 20, 2024. On Tuesday, the chip giant reached a market value of approximately 3.33 trillion USD, surpassing the software behemoth Microsoft. Consequently, NVIDIA temporarily became the most valuable company on the stock market, largely thanks to the AI boom.

At the end of May, NVIDIA opened its books for the first quarter of fiscal year 2025. Revenue soared by a staggering 262 percent to 26 billion USD, although shortages of the new chip systems are expected to continue into the next year. In a subsequent conference call, CEO Jensen Huang referred to this development as a “new industrial revolution”. For the current year, NVIDIA forecasts another revenue increase to 28 billion USD. Numerous analysts have raised their price targets in response to these stellar results. Driven by these surprisingly strong figures, NVIDIA’s stock climbed above the 1,000 USD mark for the first time (Editor’s note: prior to the 1:10 stock split).

Take Profits or Continue Investing?

Some investors have seized the recent developments as an opportunity to take profits, as reported by The Motley Fool. Understandably, investors are questioning how long this meteoric rise can continue. While the bulls anticipate that the company will keep generating profits, the bears are sceptical, noting that the AI hype will eventually wane and competition is becoming increasingly fierce, with more players entering the game. Nonetheless, NVIDIA has a significant lead in this sector, making it challenging to replace the performance of its chips in the near future.

“What the company has done in the past […] should not influence the investment decision. However, with a stock like NVIDIA, it is very difficult not to consider this as a factor in the investment decision because of the feeling of missing out,” Reuters quotes Chuck Carlson, CEO of Horizon Investment Services.

Jim Cramer advises investors to hold on to NVIDIA shares and not trade them. “Until the AI revolution runs on something else – and no matter what you hear, no one else comes close to these chips – you should just own them and not trade them,” the expert emphasized on his CNBC show “Mad Money”. “Do not sell them hastily. In fact, do not sell them at all unless you need to take profits to balance your portfolio because it has grown too large.” Cramer also advised investors to thoroughly understand the company and what NVIDIA does, as this could indeed aid in making investment decisions.