Hedge Fund: NVIDIA is still very cheap, the stock price could double by the end of the year
Hedge fund manager Eric Jackson believes that NVIDIA's stock price is expected to double by the end of this year, reaching $250, with a valuation of $6 trillion. He thinks NVIDIA's current valuation is cheap, and investors' excitement has not caught up yet. Jackson predicts that investors will start paying attention to NVIDIA's profit potential in 2025 and 2026, which will drive its stock price far above the average forward P/E ratio and close to its peak. NVIDIA's stock price has already risen by 151% this year, making it one of the world's most valuable companies. NVIDIA will launch the Blackwell chip and Rubin chip in the second half of the year, which Jackson believes will further drive the stock price up
According to the Smart Finance app, EMJ Capital hedge fund manager Eric Jackson believes that NVIDIA (NVDA.US) stock price will continue to soar by the end of this year. Jackson predicts that by the end of this year, the stock price will reach $250, representing a potential upside of about 98% from the current level. If this upward trend materializes, the valuation of this artificial intelligence chip company will reach a staggering $6 trillion.
Jackson believes that all of this is because NVIDIA's current valuation is still relatively cheap. In an interview on Tuesday, he stated, "Over the past five years, NVIDIA's average forward P/E ratio has been 40 times. After two days of adjustments, its forward P/E ratio is now 39 times. However, in the past five years, there have been three times when the forward P/E ratio exceeded 50 times, and two times when it retraced near 70 times." "Therefore, we have not yet seen that kind of excitement."
Jackson bets that as investors begin to focus on NVIDIA's profit potential in 2025 and 2026, the excitement may drive NVIDIA far above its average forward P/E ratio and close to its peak.
Jackson said, "This is a hot stock that has been consistently high. Poor financial reports may reset people's expectations, but good news will also trigger excessive enthusiasm. Despite the significant rise in the stock, investors' excitement has not caught up based on the forward P/E ratio."
NVIDIA's stock price has surged by 151% year-to-date, and this chip manufacturer reached the highest market value in the world last week, with a valuation of about $3.3 trillion.
Jackson said, "I believe that in the second half of this year, people will begin to see strong sales of Blackwell chips, with high gross margins, and start considering the upcoming Rubin chips. I believe we will start to see this excitement reflected in a high forward P/E ratio multiple, and if this happens, the company could reach a $6 trillion market value."
Jackson also believes that NVIDIA has a significant competitive advantage compared to its competitors and will leverage this advantage in the coming years. Furthermore, Jackson also stated that comparing today's NVIDIA to Cisco during the internet bubble era is unfounded.
Jackson pointed out, "This is not the Cisco of the internet era. Cisco's P/E ratio at that time reached as high as 136 times, while NVIDIA is currently below the average level of the past five years. Therefore, despite NVIDIA's outstanding performance, it is still relatively cheap compared to past trading situations."
Even with the significant rise in the stock over the past year, Jackson is not the only one on Wall Street who remains bullish on the stock. Constellation Research and Rosenblatt have set NVIDIA's target price at $200, while Bank of America recently reiterated a target price of $150.
While Wall Street believes that NVIDIA's long-term prospects remain good, it does not mean that a sharp decline can be avoided. Earlier this week, NVIDIA's market value shrank by over $400 billion, and the stock price fell by 16% for three consecutive days