Can Nvidia Sustain Its AI-Fueled Surge as Stock Price Nears Record High?

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Key Takeaways

  • Nvidia stock rose again Wednesday, approaching the record high it set last month, as the chipmaker continues to benefit from investor enthusiasm about the company’s strong position during the AI boom.
  • The continued ascent may raise questions about how the company’s stock will sustain its record-breaking climb.
  • Truist Securities analysts said that earnings growth driven by increased sales will be key to the stock maintaining its outperformance. They highlighted strong demand for AI chips and Nvidia’s prime position as factors contributing to organic sales growth.

Nvidia (NVDA) shares rose again Wednesday, approaching the record high set last month, as the chipmaker continues to benefit from investor enthusiasm about the company’s strong position during the artificial intelligence era.

The company’s AI-fueled gain has sent it into the $3 trillion market capitalization club, an achievement only previously reached by Microsoft (MSFT) and Apple (AAPL), in record time. The question on the minds of many is: how can the company and stock sustain their monumental growth?

Analysts at Truist Securities, in a report released Wednesday, examined the question of “how the biggest can get bigger,” finding that earnings per share (EPS) growth driven by increasing organic sales will likely be how Nvidia continues its rise.

The analysts highlighted how other mega market cap stocks, such as Apple, Microsoft, and Amazon (AMZN), They said that while these stocks suffered a contraction in price-to-earnings ratio, they “still outperformed the S&P by delivering strong EPS growth.”

Organic Sales Growth Supports Outperformance

Nvidia has consistently blown away investors’ expectations on revenue and earnings in recent quarters.

In May, Nvidia reported record revenue of $26.04 billion for its fiscal 2025 first quarter, more than triple what it was in the year-ago period, while EPS came in at $5.98 compared to 82 cents. The top and bottom line numbers both easily surpassed analysts’ estimates.

“We do have relative confidence that NVDA will continue to grow revenue (& EPS) organically faster than the S&P,” the Truist analysts wrote in the new report.

Demand For AI Chips Continues Growing

Surging demand for AI-related hardware could sustain Nvidia’s performance.

Truist analysts highlighted the near-term upside potential given that “NVDA’s supply chain is gearing up to deliver $150-200B of datacenter sales” in 2025. Amid the ongoing AI boom, Nvidia has been unable to keep up with surging demand for its data center products.

The analysts said while “AI server revenue growth is feverish (we estimate ~70% this year), unit growth is just getting going” as it’s still early in the AI era.

Big Expectations for Blackwell Platform

Another component that could support growth is Nvidia’s shift to offering “truly full stack solutions” rather than simply chips as they did in the past. The analysts said they “expect this dynamic was a major factor in NVDA’s revenue & EPS acceleration” over the last four quarters, and they “expect that trend to continue.”

Nvidia’s upcoming Blackwell platform offers full-stack solutions, supporting the data center needs required to train and run AI workloads. Blackwell is already in high demand and is expected to drive the chipmaker’s growth.

The analysts also noted that AI at the edge, where AI computing is done on-device rather than through a third-party server, could be “a relatively overlooked area of AI adoption.” They said that Nvidia’s growth in the AI edge market could add another $100 billion market for the company.

Nvidia shares were up 2.5% at $134.72 in afternoon trading Wednesday, approaching their all-time closing high of $135.58 set on June 18. The stock has gained 172% so far in 2024.