Earnings Report Eve Expectations Filled! Goldman Sachs also Upgrades NVIDIA: Despite the significant increase, the dynamic valuation is still below 25!
As a leading chip stock, NVIDIA has maintained a relatively low P/E ratio during its rapid rise for over a year, indicating that this growth stock is still "undervalued".
Two weeks before the earnings report was released, major banks were bullish on NVIDIA and exceeded expectations.
According to media reports, on Wednesday, following Bank of America and Goldman Sachs, Morgan Stanley also raised the target price for NVIDIA from $630 to $750, expecting further gains in the field of artificial intelligence.
Despite previous concerns in the market about excessive premiums and a decrease in orders from key customers, NVIDIA's current dynamic price-to-earnings ratio (NTM EPS) is still below 25 times, which is rare in recent years.
The dynamic price-to-earnings ratio is calculated based on the expected earnings per share for the next 12 months. As a leading chip stock, NVIDIA has maintained a relatively low price-to-earnings ratio during its rapid rise over the past year, indicating that this growth stock is still "undervalued".
As of the close on the 7th, NVIDIA rose 2% to $700.99, marking the first time in history that the closing price has exceeded $700. NVIDIA's stock price has risen by 45% since the beginning of this year, with a cumulative increase of 200% over the past year.
In the report, analyst Joseph Moore gave NVIDIA a "buy" rating and stated:
"GPUs are still in high demand, and developers tell us that there is still a long queue for GPU orders, and these customers still have to wait for months to train."
"Although the waiting time is getting shorter, it is still long, which indicates that there is high profit in deploying GPUs in the cloud center."
Regarding the phenomenon of delivery delays, Moore explained that this is mostly due to infrastructure constraints rather than a decline in market demand. Joseph Moore also stated:
"Among the strong demand for NVIDIA GPUs, many cloud providers account for about half, and as long as they deploy GPUs, they can immediately get returns, which may continue to drive strong demand."
In addition, Morgan Stanley also raised its profit expectations for NVIDIA in 2024 and 2025.
The report stated that despite the increasingly fierce competition in the AI inference market, NVIDIA can still continue to expand its revenue: It is expected that in the full year of 2024, NVIDIA's data center business revenue will reach $88 billion, higher than the previous estimate of $80 billion and the $46.7 billion revenue in 2023.The report predicts that data center revenue in 2025 will "slightly increase compared to 2024", but the profit margin will decline.
According to the report, although cloud service providers are still looking for alternatives to NVIDIA H100 and B100, such as AMD's MI300 and Intel's Gaudi 2, and there seem to be some negative factors for NVIDIA in the short term, it appears that NVIDIA is still the king in this game.