Nvidia at record highs

Hi Craig,

At the start of 2023, what analysts were expecting for NVDA earnings proved to be around 250% too low, and that underappreciation of their earnings power underpinned the huge move in the stock price that year.  When the stock was trading at $150 at the start of CY23, consensus EPS estimates sat at ~$1.30. By the end of CY23, EPS was $3.30 and the share price was $500. Currently, NVDA is at ~$700 as you say with consensus EPS estimates at $4.53 – so that makes sense, the share price is effectively following the revision in earnings.

However, the market is clearly bullish on the stock, with 58 analysts out of 64 on Bloomberg with buys, 5 holds and 1 sell, as we often say on the desk, everyone is on the one side of the canoe! While upgrades are never baked into the cake, and the earnings momentum they delivered last year was phenomenal, we do think the current share price is capturing a lot of future upside, which creates a risk. We are not buyers of the stock at current levels, although concede we have not owned this behemoth, which clearly is going to be a huge part of the AI revolution that will last a lot longer than 12-months.

NB: Share price is white – consensus earnings per share (EPS) in blue.

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NVIDIA EPS Expectations (NVDA US) – Source Bloomberg

LAST UPDATED 09/02/2024 11:37

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NVIDIA EPS Expectations (NVDA US) – Source Bloomberg

LAST UPDATED 09/02/2024 11:37