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Truist says 'organic sales growth will lead NVIDIA stock to Outperform'

EditorEmilio Ghigini
Published 07/10/2024, 09:56 AM
© Reuters

On Wednesday, Truist Securities maintained its Buy rating and $140.00 price target on NVIDIA (NASDAQ:NVDA) stock. This affirmation comes following NVIDIA's achievement of becoming the world's number one market cap company on June 18, 2024. Truist's analysis suggests that reaching the market cap pinnacle does not negatively affect future investment returns.

The firm's latest research note delves into the factors contributing to a stock's outperformance, particularly through the lens of a price-to-earnings (P/E) valuation framework.

Truist highlighted NVIDIA's potential for continued outperformance, primarily driven by organic sales growth leading to earnings per share (EPS) growth. This outlook is supported by ongoing strong demand for NVIDIA's Blackwell product, as reflected by industry contacts including component buyers and sellers.

Truist's stance remains unchanged, with the firm retaining its previous estimates and price target for NVIDIA. The analyst's commentary underscores the belief in NVIDIA's growth trajectory, emphasizing the company's ability to expand further despite already achieving significant market capitalization.

The focus on NVIDIA's Blackwell demand is particularly noteworthy, as it indicates robust interest and potential sales that could fuel the company's future growth. NVIDIA's position in the market, coupled with positive industry feedback, appears to solidify Truist's confidence in the stock's investment appeal.

In summary, Truist Securities reiterates its optimistic view on NVIDIA, projecting that the company's growth will continue to be propelled by strong product demand and subsequent earnings growth. The maintained price target of $140.00 reflects the firm's assessment of NVIDIA's value and prospects.

In other recent news, Nvidia (NASDAQ:NVDA), a leading AI-chip manufacturer, has been the focus of investor attention due to various developments. The company's second-quarter revenue report exceeded expectations, contributing to a 1.1% rise in its shares in premarket trading.

KeyBanc Capital Markets increased the price target for Nvidia's shares due to robust product demand, particularly in the data center segment. However, New Street Research downgraded Nvidia's rating from Buy to Neutral, citing concerns over the deceleration of revenue growth and increased market share by competitors.

Nvidia's shareholders approved several key proposals at the 2024 Annual Meeting, including the election of all twelve director nominees, advisory approval of executive compensation, and ratification of the company's independent registered accounting firm, PricewaterhouseCoopers LLP. In contrast, Nvidia is set to face antitrust charges in France for alleged anti-competitive behavior, marking the first time the company will face such charges.

The upcoming U.S. inflation reports and the second-quarter earnings season will be crucial for assessing whether the valuations of high-flying megacaps like Nvidia are justified.

Cantor Fitzgerald maintained its Overweight rating on Nvidia and increased the stock's price target, citing Nvidia's role in driving technological innovation and reducing computing costs. These developments highlight the dynamic and evolving landscape for Nvidia in the tech sector.

InvestingPro Insights

In light of Truist Securities' reaffirmation of NVIDIA's Buy rating and $140.00 price target, reviewing the latest data from InvestingPro could provide additional context for investors. NVIDIA's market cap has reached an astonishing $3230.0 billion, reflecting its status as a dominant force in the tech industry. The company's P/E ratio stands at 75.77, which, while high, may be justified by its significant revenue growth of 208.27% over the last twelve months as of Q1 2023. Moreover, NVIDIA's gross profit margin of 75.29% during the same period underscores its efficient operations and strong market position.

InvestingPro Tips also highlight NVIDIA's perfect Piotroski Score of 9, indicating a healthy financial state, and analysts' anticipation of sales growth in the current year, supporting Truist's positive outlook. Additionally, NVIDIA has been a consistent dividend payer for 13 consecutive years, which may appeal to income-focused investors. For those seeking more detailed analysis, InvestingPro offers numerous additional tips, including insights on earnings revisions and valuation multiples. Interested investors can take advantage of a special offer using coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.

With NVIDIA's strong financial metrics and the potential for continued sales growth, these insights may further reinforce the bullish sentiment expressed by Truist Securities. The InvestingPro platform provides an even broader range of tips, with 20 more detailed insights available for NVIDIA, aiding investors in making informed decisions.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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