Nvidia’s shares closed at an all-time high — and Melius Research predicts that the momentum will continue. “Dare We Say Nvidia Is Now Cheap?” analyst Ben Reitzes wrote in a note Tuesday. “Nvidia’s price was one of the things that made us (friends) frustrated before we received the F2Q24 call. Reitzes stated that the price of Nvidia was not too high after F2Q24 revisions and even more so when growth is taken into account. He added that “we cover a basket of AI stocks, and Nvidia now trades at only a modest price premium to the group based on PE.” The analyst believes that Nvidia shares are currently valued lower than Alphabet, Microsoft, and Apple based on enterprise-value-to-sales. Reitzes rates Nvidia’s shares as a buy. His $730 price target suggests a nearly 50% potential upside. Analyst admitted that the shares had undergone “some consolidation” after their 233.8% rally year-to date. He forecasts that Nvidia’s valuation will provide some support as it digests, and will gain some momentum in the year-end. Reitzes said that Nvidia was laying the foundation for a future high-end multiple, similar to what Apple achieved after its rapid growth. The analyst said that these attributes included 1) fostering a software eco-system that encourages developers to use their platform; 2) building a recurring software and cloud business at scale; and 3) showing[ing] that they are willing to engage in massive buybacks (the $25 billion just authorized by the company is only the beginning). The shares fell 0.4% during premarket trading on Wednesday after a previous trading session that saw them reach a record high. Michael Bloom, a CNBC reporter, contributed to this article.
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