- NVIDIA stock continued its strong bull run, reaching its all-time high today.
- The company is still a bargain compared to its top peers.
- A cup-and-handle pattern points to more gains to $260 in the near term.
NVIDIA stock is firing on all cylinders after staging its breakout earlier this month. After bottoming at $164 in March, the stock jumped to a record high of $236 on Thursday, bringing its market capitalization to over $5.7 trillion.
NVIDIA Stock is Still a Bargain
There are signs that NVIDIA stock is a bargain as it nears a $6 trillion market capitalization. Seeking Alpha data shows the company’s forward price-to-earnings ratio is 23, slightly higher than the S&P 500 Index’s average of 21.
In contrast, the iShares Semiconductor ETF (SOXX), whose top holdings include Micron, AMD, Intel, and Broadcom, has a P/E ratio of nearly 70. Historically, NVIDIA has always traded at a higher valuation than all semiconductor ETFs.
NVIDIA’s cheap valuation is happening at a time when its business is thriving. For one, the US has just allowed 10 of the largest Chinese companies to begin buying its H200 chips, a move that will ultimately bring in billions of dollars in revenue.
READ MORE: Venice Token Price: Here’s Why this AI Coin is Crashing Today
NVIDIA to Publish Results Next Week
Analysts also anticipate that its upcoming results will show revenues jumped 80% in the first quarter. This is a strong number for a company that has been around for decades.
Its annual revenue is expected to exceed $377 billion this year. With Chinese orders included, there’s a chance it will hit the $400 billion milestone this year. In a recent statement, Jensen Huang, the company’s CEO, noted that the company will sell products worth over $1 trillion through 2027.
Notably, NVIDIA has one of the biggest profit margins in the hardware industry. It has a net profit margin of 54%, making it highly profitable, a trend that will continue as chip prices jump.
This explains why it has invested billions of dollars in other companies. Some of its recent investments include Intel, Lumentum, CoreWeave, Nebius, IREN, OpenAI, and Anthropic. Most of its investments have soared over the past few months, with companies like Nebius and Intel at all-time highs.
NVIDIA is also seeking to expand into other areas. For example, management revealed plans to enter the AI CPU market, which is seeing robust demand this year. Just recently, Intel stock soared after reporting strong results, with its CPU recording strong demand.
In a Pole Position to Beat Competition
A key risk facing NVIDIA is that competition in the GPU industry continues to intensify. Most of this competition is coming from AMD, a company whose market share continues to rise. It is also coming from companies like Samsung and fast-growing Chinese startups.
At the same time, its biggest customers, including Microsoft, Google, and Amazon, are developing their own ASIC chips. In theory, this should be a big blow to NVIDIA as it means that a customer like Microsoft, which accounts for about 20% of its revenue, will start using its in-house chips.
Still, NVIDIA is in a pole position, with its technology far ahead of other firms’. Also, it will take time for these ASIC chips to come online and gain market share.
NVIDIA Share Price Technical Analysis
Technical analysis can help us identify potential price targets for an asset. In this case, a closer look shows that the NVDA stock price has formed a cup-and-handle pattern with a depth of about 23%.
Measuring the same distance from the cup’s upper side yields a price target of $260, a move that would bring its market cap to over $6.30 trillion.
READ MORE: Bullish Stock Stalls Ahead of Earnings: What Next For BLSH?
