By Adam Clark
Nvidia stock was rising early on Friday to finish its first week following its stock split on a positive note. The chip maker has risen ahead of Wall Street’s consensus targets for the stock.
Nvidia shares were up 1.5% at $131.57 in premarket trading. The stock closed up 3.5% on Thursday.
Nvidia’s 10-for-1 stock split took effect a week ago and the stock is now ahead of Wall Street’s average price target of $123.35, according to FactSet.
Nvidia’s strong rally has seen it outpace analysts’ expectations on multiple occasions during the AI rally. The company’s forward price-to-earnings multiple currently stands at around 43 times.
That’s not putting off the bulls. Oppenheimer’s Rick Schafer reiterated a $150 price target on the stock in a research note this week, based on a price-to-earnings multiple of 36 times Nvidia’s forecast earnings in 2026.
“We see several structural tailwinds driving sustained outsize top-line growth including generative AI, DC [data center]/AI accelerators and autonomous vehicles. We believe these factors justify its valuation,” Schafer wrote.
A raft of positive earnings reports this week from companies set to benefit from the artificial-intelligence boom such as Broadcom and Oracle look to have kept confidence high in demand for Nvidia’s chips.
The stock might also have benefited from bets that Nvidia’s weighting in the $70 billion Technology Select Sector SPDR ETF will have to be increased. The ETF is scheduled to rebalance its holdings on June 21, based on stocks’ closing prices for Friday. If Nvidia’s market value is larger than that of either Microsoft or Apple, it could take their spot as one of the fund’s top two holdings, triggering an allocation of more than 20%, from just 5.7% currently.
Currently Nvidia is still on track to miss out on the top two spots, having closed on Thursday at a market cap of $3.19 trillion, about $10 billion behind the other two companies.
Nvidia shares have risen 162% this year to date through to Thursday’s close. That compares with a 14% rise in the S&P 500 index and a 18% rise in the Nasdaq Composite Index over the same period.
Write to Adam Clark at adam.clark@barrons.com