Nvidia Stock Update: Why This Chipmaker is Soaring in 2023
Nvidia (NASDAQ: NVDA) has been a standout performer in recent years, consistently outpacing the broader market. This year alone, the chipmaker has more than doubled in value, making it one of the best-performing stocks with a return of 161%. Since the end of 2022, its shares have surged around 783%, and since 2019, they’ve skyrocketed 3,773%.
Nvidia counts Microsoft Corporation (NASDAQ: MSFT), Amazon (NASDAQ: AMZN), Alphabet (NASDAQ: GOOGL), and Meta Platforms (NASDAQ: META) among its top customers, which continue to be a great source of revenue for the company.
The upcoming earnings report on Wednesday will be crucial for both institutional and retail investors. Nvidia will need to deliver strong results and impressive forecasts to justify its lofty valuations. Currently trading at 47 times forward earnings estimates, Nvidia has the second-highest valuation among the Magnificent Seven, with only Tesla (NASDAQ: TSLA) ahead.
Analysts are bullish on Nvidia, with 56 buy ratings and 4 hold ratings out of a total of 60.
Concerns about Nvidia’s new Blackwell chips, such as potential delays due to overheating and design issues, have been raised. However, these concerns are unlikely to impact the strong demand expected this quarter. Nvidia’s ability to address these issues should help maintain investor confidence.
Nvidia’s P/E ratio stands at a lofty 73, reflecting the premium investors are willing to pay for its growth and dominant industry position. The company’s Piotroski ratio, which assesses financial strength based on profitability, leverage, liquidity, and operational efficiency, is perfect at 9, suggesting strong financial health and stability.
The Norwegian Government Pension Fund, a major institutional investor, has recently increased its stake in Nvidia. Heading into Nvidia’s upcoming earnings announcement, the fund has allocated nearly 3% of its portfolio to Nvidia, making it the fund’s third-largest holding after Apple and Amazon.
Investors looking to gain exposure to Nvidia have two primary options: buying Nvidia shares directly or investing through an ETF like the Roundhill Magnificent Seven ETF (NASDAQ: MAGN), which includes Nvidia among other top tech stocks.
As Nvidia prepares to report its earnings, all eyes will be on its performance and forecasts. With its stock trading at high valuations, the company needs to deliver exceptional results to justify its premium. Despite the challenges, Nvidia’s strong financial metrics and significant institutional support position it well for future growth and potentially an earnings beat.