Is Nvidia A Buy After 2023's Stratospheric Rally? Fund Manager Gary Black Thinks It's Still Cheap For 5 Reasons

Shares of Nvidia Corp. NVDA have been on a tear since the beginning of 2023, reflecting investor confidence in the chipmaker’s AI capabilities. Despite this upward trend, a fund manager believes the stock is attractively valued given its growth potential.

What Happened: Nvidia reached a new high on Tuesday, rallying 1.70% during the kickoff of the 2024 Consumer Electronics Show, closing at $531.40, according to Benzinga Pro data. The stock outperformed the Nasdaq 100 Index (up 0.17%) and the iShares Semiconductor ETF SOXX, which remained nearly flat.

This rally contributed to Nvidia’s impressive gain of 264% since 2023.

Chart courtesy of Benzinga

See Also: How to Buy Nvidia (NVDA) Stock

Gary Black, Future Fund managing partner and co-founder, said on X that investors are recognizing Nvidia’s continued affordability. Currently trading at 26.5 times the consensus adjusted earnings per share estimate for 2024, the company is expected to achieve a compounded annual growth rate of 28% in earnings per share between 2024 and 2028.

$NVDA: Investors starting to realize that at 26.5x CY2024 adj eps and 28% CAGR projected 2024-2028 eps growth, $NVDA still seems really cheap. With best in class products, great execution, strong mgmt team, no drama, low headline risk. pic.twitter.com/y6hMPFWzy0

— Gary Black (@garyblack00) January 9, 2024

Examining the reasons for this outperformance, Black, renowned for his bullish Tesla thesis, highlighted Nvidia’s best-in-class products, excellent execution, a robust management team, drama-free environment, and low headline risk.

Why It’s Important: Despite the impressive surge, analysts foresee additional upside for the stock. The average 12-month analysts’ price target is $662.39, indicating approximately 25% potential upside from the current levels, according to TipRanks.

Nvidia’s guidance for the fourth quarter predicts revenue of $20 billion, plus or minus 2%. If the company achieves this target, it is poised to report year-over-year revenue growth of over 230%. Notably, this positive outlook comes despite the U.S. ban on exporting certain high-performance chips to China, a crucial market for Nvidia.

The Santa Clara, California-based chipmaker has found success with its AI accelerator chipsets, experiencing strong demand amid the popularity of generative AI software and applications.

Read Next: Best Artificial Intelligence Stocks

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