Is it too late to cash in on Nvidia’s boom? Experts say stock may still have room to run even after AI chipmaker’s 240% surge this year – but another tech company is a safer bet

Nvidia shares are rising again after the chipmaker’s huge earnings report on Wednesday, but some of the stock’s cheerleaders believe it’s not too late to buy.

The company’s latest sales forecast beat Wall Street’s expectations and the company announced plans to buy back an additional $25 billion in stock, suggesting that the board believes the stock is undervalued.

Nvidia chips power almost all the great in the world artificial intelligence apps, and the company has benefited greatly from the AI ​​boom that fueled this year’s Wall Street tech rally.

Shares of the California-based company have already more than tripled in value since the beginning of the year, reaching an all-time high of $502.66 shortly after the opening bell on Thursday.

Nevertheless, says Inge Heydorn, partner of the GP Bullhound Global Technology Fund Market overview that it may not be too late to invest in Nvidia, but suggested rival chipmaker Advanced Micro Devices (AMD) could be a safer bet.

Nvidia president and CEO Jensen Huang speaks at a keynote presentation in Taipei in May while holding the Grace Hopper superchip

“I think it’s good to invest in Nvidia for the next six months, but you have to be aware that the risk is quite high,” says Heydorn.

“AMD is clearly a safer game,” added Heydorn, noting that he thinks the “market itself around AI will perform very, very strongly.”

GP Bullhound portfolio manager Jenny Hardy agreed, telling the outlet that AMD would benefit from supply shortages and customer demand for alternatives to Nvidia chips.

Hardy said, “the reality is that no hyperscaler wants to be tied to one vendor (it’s no secret that Nvidia chips are very expensive).”

Shares of AMD are up 61 percent year-to-date amid a broader technology rally fueled by optimism about AI.

Meanwhile, Wedbush analyst Dan Ives called Nvidia’s latest results a “historic moment” and remained highly bullish on the stock in a note Thursday.

Quite simply, Nvidia’s guidance and commentary has been on a ‘drop the mic’ level as investors now see crystal clear that this AI demand story is as REAL as any tech trend we’ve seen over the last 30 years, comparable only to the Internet in 1995 and Apple’s iPhone. launch in 2007,” he wrote.

Ives predicted that other companies that will benefit from the AI ​​boom include Amazon, Alphabet and Meta as they begin to integrate AI capabilities into their offerings, starting with cloud services.

Stifel analyst Ruben Roy also upgraded Nvidia’s stock to a “buy” rating following the company’s latest results, citing long-term opportunities for the company to take advantage as data centers upgrade to accelerated computing architectures.

Bears claim Nvidia stock is now extremely richly valued, trading at about 60 times consensus earnings over the next 12 months

However, there are inherent risks in piggybacking on a high-flying stock like Nvidia.

First, Nvidia shares are now extremely richly valued, trading at about 60 times consensus earnings over the next 12 months, compared to 40 times for AMD and 23 times for Alphabet.

That means any change in the company’s outlook could cause the stock price to plummet dramatically as investors revise their expectations for future earnings.

But Nvidia’s drivers argue the company’s astonishingly rapid growth justifies its bountiful share price, saying the chipmaker is poised for such explosive growth that investors should look beyond next year.

“With names like Nvidia and once-in-a-30-year tech trends like AI, we believe investors should take a three- to five-year view of where these growth stories are headed,” Ives wrote.

On Wednesday, Nvidia reported second-quarter adjusted revenue of $13.51 billion, a staggering 101 percent year-over-year increase and above the $11.22 billion estimates of analysts polled by Refinitiv.

The company expects third-quarter revenue of approximately $16 billion, well above analyst expectations of $12.61 billion. Nvidia’s expectations suggest that revenue will grow 170 percent in the current quarter compared to a year ago.

The company’s earnings of $6.19 billion, or $2.48 per share, were 854 percent higher than a year ago and 202 percent higher than the previous quarter.

‘A new computer era has begun. Businesses around the world are transitioning from general use to accelerated computing and generative AI,” Nvidia founder and CEO Jensen Huang said in a statement. “The race to adopt generative AI is on.”