Is it too late to buy Nvidia shares? Wall Street’s answer may surprise investors

Nvidia (NASDAQ: NVDA) the company’s shares surged 745% in the 18 months ended June 30, 2024, as artificial intelligence (AI) enthusiasm gripped the market. But since that halfway point, the stock has fallen 5%, leaving some investors wondering whether the window of opportunity has closed.

Wall Street has a clear answer: no, it’s not too late to buy Nvidia. Of the 64 analysts following the company, 94% rate the stock as a buy and 6% rate it as a hold. Currently, no analysts recommend Sell. Additionally, Nvidia has set a 12-month average price target of $150 per share, representing a 28% upside from the current share price of $117.

Moreover, some analysts expect colossal profits. In June, Beth Kendig of the I/O Fund estimated that Nvidia would be worth $10 trillion by 2030. This represents a 250% increase from its current market value of $2.8 trillion. In September, Boston Consulting Group’s Phil Panaro predicted that Nvidia’s stock would be worth $800 by 2030. This represents approximately a 585% increase.

This may surprise investors, considering Nvidia is already one of the largest companies in the world. But AI could be the investment opportunity of a lifetime, and Nvidia is arguably the most important company in the AI ​​economy. Here’s what investors need to know.

The investment thesis for Nvidia includes hardware, software and services

Nvidia produces the most desirable graphics processing units (GPUs) in the computing industry. Graphics processors are chips that perform technical calculations faster and more efficiently than central processing units (CPUs), allowing them to accelerate complex workloads such as training large language models and running artificial intelligence (AI) applications.

According to analysts, Nvidia accounted for 98% of data center GPU shipments last year, and its share of the AI ​​chip market exceeds 80%. One of the reasons why the company has achieved such a dominant position is the excellent performance of its equipment. Nvidia chips consistently outperform competitors in MLPerf benchmarks, objective tests that evaluate AI systems for training and inference tasks.

Another reason why Nvidia has achieved such a dominant position in the market is the CUDA software ecosystem. CUDA includes hundreds of software libraries that simplify the development of GPU-accelerated applications. No other chipmaker offers anything close to CUDA, which is why Nvidia GPUs have become the gold standard in data center accelerators.

Nvidia has cemented its dominance in data centers by expanding into adjacent industries. For example, the company is a market leader in network equipment used for generative artificial intelligence and recently introduced its first server processor. Nvidia also offers subscription software and cloud services that support the development of AI applications in a wide range of domains, from recommendation systems in retail to computer vision in healthcare.

In short, Nvidia has a lasting competitive advantage when it comes to AI, not only because its chips are the fastest, but also because it participates in many areas of the AI ​​economy. To quote Zoe Thomas from The Wall Street Journal: “Nvidia already dominates the chip market fueling the artificial intelligence boom. Today, the company is playing an increasingly important role in AI data center design.”

Nvidia is expected to grow rapidly amid strong demand for AI infrastructure

Grand View Research estimates that the AI ​​accelerator market will grow 29% annually through 2030, while spending on AI hardware, software and services will grow at 36% annually over the same period. This bodes well for Nvidia and its shareholders.

In May, Toshiya Hari at Goldman Sachs wrote: “We believe Nvidia will remain the de facto industry standard for the foreseeable future, given its competitive advantages across hardware and software capabilities, as well as the installed base and ecosystem it has built over many decades, and the pace at which it is and will continue to innovate over the next few years.”

But he’s not the only Wall Street analyst praising Nvidia. Dan Ives of Wedbush Securities called the company “the cornerstone of the artificial intelligence revolution.” CFRA’s Angelo Zino believes that Nvidia “will be the most important company for our civilization over the next decade as the world becomes more based on artificial intelligence.”

With this in mind, Wall Street expects Nvidia’s adjusted earnings to grow 49% annually through fiscal 2026 (end of January 2026). This consensus makes the current valuation of 53 times adjusted earnings look quite reasonable. Patient investors can comfortably buy a small position today and should consider increasing that position in the event of a pullback.

Is it worth investing $1,000 in Nvidia now?

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Trevor Jennewine has positions at Nvidia. The Motley Fool holds positions in and recommends Goldman Sachs Group and Nvidia. The Motley Fool has a disclosure policy.