On Monday, NVIDIA exceeded last week’s intraday high of $140.89, closing up 4.14% at $143.71, marking a new all-time closing high. The company's market cap now stands at $3.53 trillion, nearing Apple’s $3.6 trillion valuation.

NVIDIA's next test will come with Tesla’s earnings report, set to be released after the market closes this Wednesday. Following that, earnings reports from Microsoft, Amazon, Alphabet (Google's parent company), and Meta will also significantly impact NVIDIA’s stock performance.

Chinese stocks saw mixed results, with the Nasdaq Golden Dragon China Index falling about 0.80%. Baidu dropped more than 2%, while Vipshop, Alibaba, NetEase, NIO, and Futu Holdings declined over 1%. Tencent Music, Weibo, JD.com, iQiyi, and Full Truck Alliance experienced slight losses. On the positive side, XPeng Motors gained over 3%, while Bilibili, Pinduoduo, and Li Auto saw slight gains.

NVIDIA Hits Another Record High

On Monday, U.S. stocks closed with mixed results—Dow Jones fell 0.80%, Nasdaq gained 0.27%, and the S&P 500 dipped 0.18%. NVIDIA rose over 4%, reaching a new all-time high with a market cap surpassing $3.5 trillion, close to Apple’s valuation. Notably, NVIDIA's stock has surged over 180% year-to-date.

Bank of America analysts recently predicted that NVIDIA’s stock will continue to rise, raising their price target from $165 to $190. This suggests the stock could climb an additional 38% from its Friday closing price of $138.

Despite the stock’s remarkable gains, Bank of America still considers NVIDIA's valuation attractive. The bank's optimism stems from three key drivers:

1. Recent industry events (TSMC’s earnings, AMD AI developments, conferences with companies like Broadcom and Micron, the speed of large language model rollouts, comments on capital expenditures by major hyperscale companies, and NVIDIA managing "insane Blackwell demand").
2. Underestimated corporate partnerships (with Accenture, ServiceNow, Oracle) and software products (like NIM services).
3. NVIDIA’s potential to generate $200 billion in free cash flow (FCF) over the next two years.

Bank of America expects NVIDIA's earnings per share (EPS) to grow by 13%-20% during the 2025-2026 fiscal years, and it raised its price target to $190. By 2027, NVIDIA’s EPS is projected to exceed five times its current level, reaching $5.67, with its price-to-earnings (P/E) ratio dropping to a more moderate 24x.

Narrowing Margin for Error in the Market

According to consulting firm International Business Strategies, which tracks industry data, the AI chip market is expected to grow by 99% in 2024 and another 74% in 2025.

However, any minor slowdown in NVIDIA’s growth could lead to a stock decline, as seen after the previous earnings report, when investors were underwhelmed by its performance.

On Monday, Susquehanna analyst Christopher Rolland maintained a "positive" rating on NVIDIA, predicting steady demand in AI. Rolland expects some correction in capital expenditures by hyperscale companies but notes that the bar for AI stocks has risen. He added that NVIDIA may need to raise its guidance to support further stock gains.

According to Bloomberg’s tracking data, Wall Street analysts expect NVIDIA’s third-quarter earnings per share to reach $0.74, representing an 84% year-over-year increase. Revenue is expected to grow 83% to $33.1 billion.

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