The ai chip dominator, known as the "most important stock on the planet" by Goldman Sachs,$NVIDIA (NVDA.US)$After skyrocketing 240% in 2023 and rising 170% since 2024, Nvidia's soaring stock price, which benefited from the unprecedented AI frenzy, seems to have cooled down in the short term, prompting investors to weigh whether to cash out, continue to hold, or buy the stock on dips.

Looking at a longer time frame, NVIDIA's stock price has soared more than 1000% since October 2022 and has become the world's largest market-cap listed company at one point this week, ascending to the throne of "global stock king" for the first time. After this 1000% AI crazy party, global funds may pour back into rational thinking instead of blindly following the trend, which may mean that NVIDIA's soaring stock price may undergo a short-term downward adjustment or consolidation under pressure from various factors, but it is difficult to change the stock price bull trend of "AI seller" NVIDIA in the AI era.

Wall Street analysts that are bullish on NVIDIA's stock price emphasize that the stock will continue to rise and may even hit $150 or $200 within the year (as of the close on Thursday, NVIDIA's stock price was $130.780). Although the NVIDIA stock price suffered panic selling pressure during the "triple witching day" of stock option expiration and large-scale sell-offs by retail investors, Bank of America's analysts believe that the stock still represents a very attractive investment opportunity, and emphasize that any degree of decline in NVIDIA's stock price should be viewed as a good opportunity to buy more stocks on dips.

NVIDIA's H100/H200/GB200 AI GPUs are the core hardware driving heavyweight artificial intelligence applications such as ChatGPT and Sora. Since 2024, the computing power demand for various AI applications and iteration training end-side computing power requirements such as ChatGPT, Claude, and Sora have continued to explode, fully driving the wave of global AI data center expansion, stimulating the soaring demand for NVIDIA AI GPU servers and AI chips.

In late May, NVIDIA, which was hailed by Goldman Sachs as "the most important stock on Earth" for its AI chips, announced unparalleled performance that shook global investors and dispelled concerns about a slowdown in spending by AI-related companies. NVIDIA once again strengthened the "AI faith" of tech stock investors on its own, driving continuous growth of US tech stocks, and also helped NVIDIA's stock price kick off a new round of crazy rises, continuously setting record highs that shocked investors.

Nvidia's total revenue in Q1 increased by 262% year-on-year to $26 billion, setting an all-time high. Its total revenue year-on-year growth rate has exceeded 200% for three consecutive quarters. With strong demand for the H100/H200 GPU, Nvidia's Q1 data center revenue increased by 427% year-on-year to $22.6 billion, a historic high.

Therefore, headquartered in Santa Clara, California, Nvidia is at the forefront of a large-scale technological revolution, and global investors are betting real money on Nvidia becoming the leader of the AI era. Wall Street expects Nvidia's revenue to at least double to $120 billion in fiscal year 2025, and is expected to continue to increase to $160 billion in the next fiscal year, and even possibly reaching $200 billion. In comparison, Microsoft, which also has a market capitalization of over $3 trillion, is only expected to grow its revenue by about 16% in the current fiscal year.

NVIDIA's stock performance has attracted investors who are worried about missing out on more returns, and they rely on a strategy of buying on dips to continuously buy NVIDIA. However, this also makes NVIDIA's stock valuation higher and higher, for example, the P/E ratio is expected to increase by about 80% this year. Even slightly negative news could make the company's stock price more susceptible to sharp short-term corrections.

"Unprecedented performance in the past should not be the basis for investment decisions," said Chuck Carlson, CEO of investment firm Horizon Investment Services. "For stocks like NVIDIA that have undergone a surge, it is difficult to make it not an important factor in investment decisions, as people always have a sense of chasing after something."

"NVIDIA bulls versus bears" finally begins to escalate.

From 2023 to 2024, Nvidia's stock price trend has brought high returns to long-term bullish investors and has punished those who were skeptical with a 'sky-high' penalty. The company's stock price has risen by 170% since 2024, with a market cap soaring to more than 3.2 trillion US dollars, surpassing Microsoft and Apple at one point this week. Its higher weighting has driven the overall earnings per share of S&P 500 index companies continuously upwards. However, as Nvidia's stock price plummeted significantly on Thursday, the shorts, which had been suppressing the stock price, gradually recovered on the eve of 'Triple Witching Hour,' and the confrontation between the bullish and bearish forces of Nvidia has finally started to escalate.

Optimistic investors point out that Nvidia's absolute dominance in the field of artificial intelligence chips, relying on the CUDA platform and high-performance GPUs, is a key reason why they are bullish.

Nvidia's AI GPUs' ultra-high performance and continuous participation in accelerated computing projects across the world's largest data centers make it difficult for its core position in data centers to be replaced. Moreover, the Nvidia proprietary CUDA software framework used by AI software developers globally to program, optimize and accelerate AI processors and develop AI training/inference systems is almost unbreakable in terms of Nvidia's leading position.

Ivana Delevska, founder and chief investment officer of Spear Invest, still holds a positive outlook on the long-term prospects of Nvidia's stock. She expects Nvidia's performance to continue to outperform Wall Street analysts' expectations. Nvidia is the largest holding of the Spear Alpha ETF (SPRX.US) under the institution, accounting for nearly a 14% stake in the fund.

"If the stock price is crazily rising like it is now, but the profits have not really changed, yes, we will be very worried," Delevska said. "But Nvidia's performance growth is very strong, and the position we are in now has considerable earnings support."

In fact, according to LSEG Datastream's statistical data, Nvidia's current expected P/E ratio is about 45 times, only slightly higher than its 5-year average P/E ratio of 41 times, although Nvidia's expected P/E ratio at the beginning of this year was only 25 times. Meanwhile, this valuation is significantly lower than the startling valuation of over 84 times from about a year ago.

Tom Plumb, president of Plumb Funds, believes that Nvidia chips' opportunities beyond the field of artificial intelligence are significantly underestimated. The company's holdings of Nvidia stocks have exceeded seven years and are the largest holdings in its two flagship funds. "What we really are discussing is data and the way we get data," Plumb emphasized."They have the fastest and smartest chip products that can do this, and they are not just doing it in the AI field."

In addition, the forces that hold a cautious attitude towards Nvidia's stock price are gradually growing, mainly concerned that Nvidia's future performance may not live up to Wall Street's optimistic growth expectations. Gil Luria, an analyst at D.A. Davidson, said that Nvidia has a "truly revolutionary" chip product and has achieved "unprecedented growth in performance." However, he rates the stock as "neutral" with a target price of only $90, while the stock price was $130.78 on Thursday.

Looking ahead to the next few years, analyst Luria doubts whether Nvidia's core customer base, such as Amazon AWS and other computing giants, will continue to spend enough money to drive Wall Street's strong growth expectations for the company. "Cautiousness with Nvidia is due to long-term performance prospects," Luria said. "This unprecedented performance may be difficult to maintain."

Billionaire investor Stanley Druckenmiller said last month that he reduced his position in Nvidia in early 2024, "AI may be overhyped now, but in terms of the long-term development of AI technology, perhaps Nvidia's value is still underestimated."

Carlson of Horizon Investment Services believes that Nvidia should continue to be "bought," but as the stock valuation is relatively high, it cannot be included in Horizon Investment's approximately 30-stock investment portfolio.

Other concerns include Nvidia's dominant position in the absolute market for data center AI chips may continue to be eroded. Tech giants Microsoft, Meta (Facebook), and Alphabet (Google) are all developing proprietary data center AI chips and are striving to add their AI chip computing power to their AI software developer ecosystems and cloud computing service systems. This will undoubtedly put pressure on Nvidia's AI chip revenue expectations.

Analysts from Morningstar said that Nvidia's core large clients such as Amazon, Microsoft, and Meta will eventually seek to reduce their reliance on Nvidia chips and diversify their supplier base. Morningstar's fair value expectation for Nvidia is only $105.

Morningstar analyst Brian Colello wrote this month: "Nvidia currently occupies an absolute dominant position in the field of artificial intelligence. If it can continue to maintain its leading position in the next ten years, the company's profitability will be limitless." "However, any signs of successful development of alternative computational products could significantly limit Nvidia's stock price increase."

From a long-term perspective, the rally of the "world's most important stock" may be far from over.

As billionaire investor Stanley Druckenmiller said, from the perspective of the long-term development of artificial intelligence technology, Nvidia, perhaps the "most important stock on earth," is still undervalued.

Wall Street renowned investment institution Rosenblatt recently issued a major research report, the core content of which is: based on Nvidia's potential prosperity of its software business with CUDA as its core, even though the stock price of the AI chip hegemon Nvidia has soared in a year, the stock price of this chip giant will continue to climb in the next 12 months, and it is expected that the Nvidia stock price will be 50% higher than the current level. This is the opinion of Rosenblatt's chip industry analyst Hans Mosesmann, who has raised the institution's target stock price for Nvidia within 12 months from $140 to a staggering $200 per share in this report, ranking the highest target price for Nvidia among Wall Street analysts.

Rosenblatt's latest bullish prediction also means that the total market value of the "global stock market new king" Nvidia, which recently topped the "world's highest market value listed company" title, may reach 5 trillion US dollars within 12 months. Looking to the future, analyst Mosesmann said that Nvidia's real source of strong profits is not only its AI GPU products that focus on AI hardware infrastructure, but also Nvidia's software business, which is led by Nvidia's popular CUDA software and hardware collaborative platform. That is, "CUDA+AI GPU" jointly forms Nvidia's extremely powerful moat.

Last month, Beth Kindig, a technology industry analyst from the well-known investment institution I/O Fund, was also very bullish on Nvidia's software business with CUDA as its core revenue expectation. I/O Fund analyst Kindig's long-term market value outlook for Nvidia is even more aggressive. The analyst released a report last month stating that by 2030, Nvidia's stock price will soar by more than 200% compared to the current level, and its market value is expected to reach 10 trillion US dollars (Nvidia's current market value is about 3.2 trillion US dollars).

In the previous month, Beth Kindig, a technology industry analyst from well-known investment institution I/O Fund, was also bullish on Nvidia's software business revenue expectations based on CUDA.

Although Nvidia's stock price brought panic selling on the eve of the "Triple Witching Day" on Friday and fell sharply under the pressure of individual investors' profit-taking, analysts at Bank of America believe that the stock still represents a very attractive investment opportunity. Bank of America emphasizes that any degree of decline in Nvidia's stock should be viewed as an opportunity to buy more stocks on the low side.

In its latest report, Bank of America analysts wrote that investors should continue to be bullish on the chip giant that drives AI prosperity, and reiterated their "buy" rating on Nvidia with a target price of up to $150, which means that the stock still has about 15% upside potential within the next 12 months.

Bank of America emphasizes in the report that the hardware deployment cycle of generative artificial intelligence (GenAI) may last as long as 3-5 years, but it is currently only in its second year, and it is estimated that Nvidia has up to $300 billion of opportunities to leverage, which is about three times its expected revenue this year. Bank of America also expects Nvidia's next-generation AI GPU based on the Blackwell architecture to bring huge revenue contributions.

Edited by Jeffrey