Stock market

Is Nvidia the best AI stock to buy today?

If you had asked me 12 months ago my opinion on the best artificial intelligence (AI) stocks, I would have said Chip Designer. Nvidia (NASDAQ: NVDA). In an article posted this time last year, in which I discussed how I was running the theme, I said it was “My number one play for AI exposure

However, today Nvidia stock is trading 200% higher than it was then. He is one much more Gains in just one year so do I still see this as the best AI stock on the market? Let’s discuss.

Powering the AI ​​Revolution

The way I see it, Nvidia is still the most important player in the AI ​​ecosystem.

Recently, almost all major tech companies (Microsoft, the alphabet, Amazon, Metaetc.), are buying Nvidia chips to power their AI applications. Without its products, we wouldn’t be seeing the same kind of innovation from these companies.

Looking ahead, Nvidia chips are likely to power the next wave of AI innovation.

Earlier this year, the company introduced its new Blackwell chips, designed to help companies build and run generative AI applications with lower energy consumption and cost. It is likely to see huge demand from big tech companies.

Generative AI is the defining technology of our time. Blackwell is the engine powering this new industrial revolution. Working with the world’s most dynamic companies, we will deliver on the promise of AI for every industry.

Jensen Huang, CEO of Nvidia

A sharp rise in share prices

Now, when a stock rises more than 200% in a 12-month period, it usually ends up trading at a much higher price.

But that’s not really the case with Nvidia.

You see, over the past year, the company’s revenue and earnings have grown due to high demand for its AI chips.

So, while its share price has risen sharply, its price-to-earnings (P/E) ratio has not.

For the current fiscal year, Wall Street analysts expect that Nvidia will post earnings of $24.90 per share. At today’s share price, that equates to a forward P/E ratio of 36.

That’s actually about 50% lower than the company’s P/E ratio at this time last year, believe it or not. In other words, the stock is outstanding cheap That was 12 months ago.

At more than that earnings, the stock isn’t that expensive, in my view.

It’s worth noting that many Wall Street analysts now have share price targets between $1,100 and $1,200.

The best AI stock?

Having said all that, I’m not rushing to buy the chip stock at current levels.

After a 200% gain in 12 months, I would wait for a good pullback before buying more shares. Because there are few risks that can lead to volatility in share prices in short term.

One is lower-than-expected guidance for the company’s Q1 results on May 22. Another new AI chip is from companies like Products. apple.

Don’t get me wrong – I’m still very bullish on this stock over the long term.

But if I had to name my best AI stocks today, I’d probably go with Alphabet or Amazon because they’re a little less hyped right now.


Source link

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button