Semiconductor company Nvidia(NVDA) - Get NVIDIA Corporation Report will host its Annual Investor Day on March 22. Nvidia investors will have the opportunity to get a clearer look at the company's initiatives and the progress of its growth in its core markets.
Last year's Annual Investor Day resonated well with Nvidia shareholders. The stock soared over 3% after the event and coincidentally leveraged a super-rally of nearly 120% to an all-time high in late November 2021.
However, with Nvidia shares currently nearly 95% higher compared to the same period last year, is it possible the stock could undergo a similar rally after this year's event?
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Analysts expect Nvidia to release a roadmap update during its Investor Day events. This roadmap should hopefully give us a clear view of the company's strategy for the current year.
Wells Fargo analyst Aaron Rakers — who recently added Nvidia to his "signature pick" list — believes that the company will expand its software-only offering, upgrade the longevity of the GeForce Gaming GPU, and also expand its auto pipeline. Rakers thinks the day's events could lead analysts to forecast earnings per share of between $9 and $10 by 2024.
On March 21-24, the company will also host its GTC Conference, which is an event dedicated to the developers community.
At the GTC Conference, Nvidia will have the opportunity to explore and share its artificial intelligence (AI) initiatives through its Nvidia Omniverse platform, where developers, designers, and other professionals can connect in a virtual space to share tools and create projects together.
The Wall Street consensus is super-bullish on Nvidia stock. Based on the latest ratings provided by analysts over the last three months, Nvidia is a strong buy and its median price target is $352. That would reflect an upside of more than 40%, considering NVDA's March 17 price at $246.55.
Prior to the Investor Day event, Cowen analyst Matt Ramsay has estimated Nivida stock's fair price to be $350, indicating an upside of more than 40%. According to Ramsay, the recent pullback in the stock is a good opportunity for investors for the long term. He considers Nvidia to be "the industry's best open-ended AI driver growth story."
Although the semiconductor sector has performed very well over the past year, by 2022, the sector has shrunk mostly due to a turbulent macroeconomic environment.
One of the main concerns about investing in Nvidia doesn't involve its fundamentals and future projections, but rather its stretched valuation when compared to the industry average.
Nvidia currently trades at a price-to-earnings (P/E) ratio of 55 times, 170% higher than the industry average of 20 times. Competitor Intel(INTC) - Get Intel Corporation Report trades at a P/E of 8 times, Broadcom(AVGO) - Get Broadcom Inc. Report trades at a P/E of 20 times, and TSMC(TSM) - Get Taiwan Semiconductor Manufacturing Co. Ltd. Report trades at a P/E of 25 times.
But because Nvidia is a technology company, it is priced based on its technological potential, rather than its financial results.
Nvidia is the industry benchmark in Data Center, a sector that is expected to grow at a CAGR of 10.5% by 2030, as well as Gaming, which is expected to grow at a CAGR of 13.2% by 2028. Finally, the company is making strong investments in the automotive sector, which is expected to grow at a CAGR of 40% by 2030.
If Nvidia's management provides investors with some data points on how these segments will be handled in the future, I believe this will reflect positively on the stock and perhaps accelerate its path to becoming the next Big Tech group member.
(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting Wall Street Memes)