Nvidia's Shares are Surging Today – Is the Ideal Moment to Invest in the AI Pioneer Already Past?
Nvidia (NVDA dropping 2.25%) sees its stock surging in Tuesday's trading, fueled by news about its Blackwell processors and optimistic analysis from experts. By 3:30 p.m. EST, the company's share price had soared by 4.6%.
Recent revelations about overheating issues with Nvidia's advanced Blackwell processors turned out to be old news, as these problems had been solved several months ago. Additionally, the AI trailblazer's stock was granted price hikes from two distinguished financial firms. With Nvidia set to announce its third-quarter results tomorrow, its stock has surged approximately 196% throughout this year's trading sessions.
Is buying Nvidia stock still a smart move?
Nvidia has dominated the stock market this year as a major player. Upcoming, it is launching the next generation of Blackwell graphics processing units (GPUs), generating excitement as the company prepares for its Q3 report tomorrow. Today's announcement that the reported overheating concerns for the Blackwell processors had already been resolved is a positive sign. Moreover, the stock received a boost from favorable analysis from two influential financial firms.
Using a positive outlook for the demand till 2025 as a foundation, Truist increased its 1-year target for Nvidia stock from $148 per share to $167 per share. Stifel was even more optimistic, keeping a buy recommendation on the stock and upping its 1-year price target from $165 to $180 per share.
In Nvidia's last quarterly update, it forecasted Q3 sales around $32.5 billion, representing a potential increase of around 80% year-over-year. The company also highlighted a projected non-GAAP (adjusted) gross margin of nearly 75%. Investors will pay close attention during the assessment of the company's ability to maintain its impressive pricing power in the AI sphere. Quite notably, Wall Street's expectations for Nvidia are even higher than the company's own stated goals, implying that a drop in the stock price is possible even if the AI pioneer outperforms the consensus sales and earnings estimates.
From an investment perspective, Nvidia stock remains a lucrative long-term prospect. The company maintains a strong market position in the advanced AI GPU sector, and its superior software platform gives it an edge that amplifies its hardware dominance. Conversely, the stock could show volatility following the earnings report, leading investors to consider a structured dollar-cost-averaging strategy instead of immediately investing a large sum of money all at once.
Considering the favorable analysis from financial firms and the resolution of overheating concerns with Nvidia's Blackwell processors, investing in the company's stock could be an opportunistic move. Truist, for instance, has increased its 1-year target for Nvidia stock from $148 to $167, while Stifel remains bullish with a buy recommendation and a revised 1-year price target of $180. However, due to high expectations from Wall Street, the stock might show volatility following the quarterly earnings report, making a dollar-cost-averaging strategy a prudent approach for investors.
