Since the AI boom initiated by ChatGPT over the past two years, NVIDIA (NVDA, Financial) has seen its market value soar by $3 trillion, marking an unprecedented growth within such a short time. However, the landscape is shifting as competitors and customers vie for increased market share in AI chips, while overall revenue growth in the semiconductor industry decelerates.
Adding to the uncertainty, the Biden administration is contemplating restrictions on overseas sales of NVIDIA's most advanced chips. It remains unclear how the new government might approach this issue. Despite these challenges, investor confidence remains robust, driven by increasing AI computing expenditures, potentially boosting NVIDIA's market valuation by hundreds of billions by 2025.
Kevin Mahn, CIO at Hennion & Walsh Asset Management, expressed optimism about NVIDIA's growth potential, despite acknowledging possible increased volatility. The recent turbulence was evident when a speech by NVIDIA's CEO, Jensen Huang, fell short of investor expectations, leading to a significant drop in the stock's price, which has been declining for five consecutive trading days, down 12% from its January 6 peak.
Joanne Feeney from Advisors Capital Management highlighted NVIDIA's inherent volatility and mentioned the upward revision of its price target, citing expectations of profit growth consistently outpacing the average for several years to justify its valuation. Analysts predict NVIDIA's share price could rise by 32% over the next year, potentially pushing its market cap above $4 trillion, surpassing close rivals Apple (AAPL) and Microsoft (MSFT). This fiscal year's revenue is expected to reach $129 billion, up from $27 billion two years ago.
