A hedge fund manager stated that Nvidia's stock price is still cheap from a forward PE perspective. Eric Jackson expects Nvidia's stock price to reach $250 per share by the end of this year, with a market cap potentially reaching $6 trillion.
Despite experiencing a three-day decline recently, hedge fund EMJ Capital founder Eric Jackson still believes that the stock price of Nvidia, the "AI leader", will continue to skyrocket by the end of this year. Jackson expects Nvidia's stock price to reach $250 by the end of this year, with a 98% potential increase from current levels. As of Wednesday's US stock market close, Nvidia rose 0.25% to $126.40, with a market cap of about $311 billion. If Jackson's prediction becomes reality, Nvidia's market cap will reach an astonishing $6 trillion by the end of this year. He said in an interview that this is all because Nvidia's stock valuation is still low. "In the past five years, Nvidia's average expected PE ratio has been 40 times. Yesterday, after two days of adjustments, its expected PE ratio was 39 times. But in the past five years, the company's expected PE ratio has exceeded 50 times three times and has been close to 70 times twice, and then fell back. So we have not seen this excitement yet," he said. Jackson believes that as investors begin to focus on Nvidia's profit potential in 2025 and 2026, an optimistic sentiment may drive Nvidia far above its average forward PE ratio and close to its peak. Of course, how high Nvidia can ultimately rise still depends on the "report card" it delivers.
Jackson predicts that Nvidia's stock price will reach $250 by the end of this year, with a 98% potential increase from current levels. As of Wednesday's US stock market close, Nvidia rose 0.25% to $126.40, with a market cap of about $311 billion. If Jackson's prediction becomes reality, Nvidia's market cap will reach an astonishing $6 trillion by the end of this year.
He said in an interview that this is all because Nvidia's stock valuation is still low.
"In the past five years, Nvidia's average expected PE ratio has been 40 times. Yesterday, after two days of adjustments, its expected PE ratio was 39 times. But in the past five years, the company's expected PE ratio has exceeded 50 times three times and has been close to 70 times twice, and then fell back. So we have not seen this excitement yet," he said.
Jackson believes that as investors begin to focus on Nvidia's profit potential in 2025 and 2026, an optimistic sentiment may drive Nvidia far above its average forward PE ratio and close to its peak. Of course, how high Nvidia can ultimately rise still depends on the "report card" it delivers.
"What will happen in the second half of this year? I think we will begin to see how well Blackwell chips are selling, how high their gross margins are, and what the upcoming Rubin chips will bring. As soon as this happens, we will see an optimistic sentiment reflected in a higher expected PE ratio, and if this happens, the company's market cap may reach $6 trillion," he said.
Jackson also believes that Nvidia has a significant leading advantage in competition and will continue to leverage this advantage in the coming years. In addition, he said that comparing Nvidia with Cisco during the Internet bubble period is unfounded.
"This is not the Cisco of the Internet era. At that time, Cisco's forward PE ratio reached a peak of about 136 times, while Nvidia is still relatively cheap compared to the past five years of trading levels. So even though the stock is performing so well, it is still relatively cheap compared to past trading levels," he said.
Of course, Jackson is not the only one on Wall Street who is bullish on Nvidia. Strategic consulting firm Constellation Research and Rosenblatt have a target price of $200 for Nvidia's stock, while Bank of America recently reiterated its target price of $150.