Chipmaker Nvidia has dominated headlines over the past year, especially after its stock price rose an astronomical 240% in 2023. The stock was flat last week but is still up nearly 80% from 2023 levels. FactSet data shows that most analysts are still bullish on Nvidia. Of the 59 analysts covering the stock, 52 rate it a buy or overweight rating, while 7 rate it a hold. Analysts’ average price target is $1,004.89, with potential upside of nearly 12%. However, the sharp rise in Nvidia’s stock price has raised questions about whether those who haven’t invested yet should buy the stock now or wait and see if its price drops. CNBC Pro spoke with two fund managers who disagreed. BUY NVIDIA Trent Masters, portfolio manager at Sydney-based Alphinity Investment Management, has a buy recommendation on Nvidia, although he admits “it’s hard to buy into a stock that has gone up a lot”. “I personally missed Nvidia’s initial performance and didn’t buy the stock until it hit $390 after earnings last May. This was probably one of the hardest things I’ve done in the past 10 years because buying “To get into a stock that’s gone up so much because it feels like you might have made a mistake, but I think investors have to look at these things objectively,” he said. “We’ve seen its earnings quadruple to $29 a share, which we’ve never seen before.” Masters’ only concern is that in the long term, the chipmaker could lose Part of the market share was lost to competitors such as Advanced Micro Devices. However, he remains bullish on the company given demand for the chip maker’s product suite, strong market share of more than 50% in the graphics processing unit (GPU) segment and the sustainability of its earnings. Adam Coons, a portfolio manager at Winthop Investment Management in the United States, takes a different view. He acknowledged that Nvidia is a “great company” that has a virtual “monopoly” in the field of artificial intelligence chip manufacturers, and he has been reducing his holdings in the company’s stock. “Nvidia was a company that went too far, too fast. We held Nvidia through the rebound, but we have started selling because the current valuation is too high,” Coons said, adding that he still held the stock. stock. He’s now waiting for Nvidia’s valuation to “normalize” a bit before adding to his holdings again. Metrics he uses to assess this include the normalization of the company’s price-to-earnings ratio and the addition of additional revenue streams, “which could justify future valuations.” For example, he projects annualized revenue growth of nearly 50% over the next five years to justify the stock price. “If that were the case, I would definitely buy more shares. I might add to my holdings, but I need a little more comfort. Even if I do miss out on some upside, I could wait just to make sure I’m paying the right amount for the stock. Price,” Coons said. In fiscal year 2024, Nvidia’s total revenue will increase by 265% annually. Despite reducing his position in the company’s stock, Coons remains cautiously optimistic about Nvidia. “It’s definitely a company or a stock that you want to own over the long term. I just think you need to be careful about some higher volatility and some bigger moves in the short term,” Coons added.
