Could Nvidia stock hit $150 before the end of 2024?

Nvidia (NASDAQ:NVDA) has quite a success in 2024. At the beginning of the year the price was around $50 split-adjusted, but has risen to around $130. Now the question becomes: Could Nvidia hit $150 before 2025, thereby securing a tripling of its share price for a second year in a row?

It's not far away, but there are still many trading days until the end of 2024, which could bring some surprises.

GPUs are a key element of AI

Nvidia's incredible rise is directly tied to the artificial intelligence (AI) race. Many companies are trying to develop a leading AI model for their platform, and other service providers (like the cloud computing giants) are increasing computing power by purchasing more Nvidia graphics processing units (GPUs).

GPUs are suitable for this task because they can process multiple calculations in parallel. Combine this aspect with the ability to connect thousands of GPUs in clusters and you have the ability to process intensive AI workloads very quickly.

These GPUs aren't cheap either. One of the most popular Nvidia GPUs is the H100, which is estimated to cost around $25,000 per unit. So when you see articles about companies deploying 10,000 GPUs, e.g TeslaIt's safe to assume that the Dojo computer cost around $300 million when you take into account the other elements in the systems.

But GPUs aren't a subscription service, so Nvidia needs to continue selling more GPUs to grow. One factor that could help Nvidia grow is the new Blackwell GPU architecture. Blackwell offers enormous advantages over the previous generation Hopper. It uses less energy and can perform calculations much faster than Hopper. This could encourage some customers to upgrade their existing hardware, which could be a catalyst for further growth.

Blackwell's launch has been delayed a few times and is currently scheduled to begin production ramp-up in the fourth quarter of 2024. We'll get an update when Nvidia announces its third quarter fiscal 2025 results sometime in late November; This update could be what the stock needs to reach $150 before 2024.

Investors are betting that Nvidia's profits will rise massively next year

There are many high expectations for Nvidia shares. It currently trades at 48.6 times forward earnings, which represents a fairly high premium.

Most companies don't stay at this level for long unless they can sustain rapid growth. Instead, they either meet expectations and their valuation slowly declines, or they fail to meet those lofty goals and investors dump the stock. Then the valuation falls because the share price falls.

So far, Nvidia has been able to meet the high expectations that the market has placed on its stock, but this must continue in 2025 and beyond in order to achieve the returns that shareholders have come to expect.

But the question is: could Nvidia go to $150 this year? I think that's possible given how much excitement there is around AI, especially if Nvidia's Q3 fiscal year 2025 (which ends in late October 2024) goes well. We won't know the results until the end of November. There is also a choice between now and the release of these results, and the market could react strongly one way or another or do nothing at all depending on the result.

Looking into the future, there are many unknowns, but one thing seems certain: we are only at the beginning of AI integration. We will need more GPUs in the future to take full advantage of AI capabilities. So if Nvidia can't hit $150 this year, I'm sure it will probably hit $150 sometime in 2025.

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Keithen Drury holds positions at Tesla. The Motley Fool has positions in and recommends Nvidia and Tesla. The Motley Fool has a disclosure policy.

Could Nvidia stock hit $150 before the end of 2024? was originally published by The Motley Fool