Discover the Latest Equity Divided Securities in the Dow Jones Index. It's Experienced a 910% Surge Since the Beginning of Last Year, and Financial Experts Still Advocate for Purchasing, as Per Wall Street.
Discover the Latest Equity Divided Securities in the Dow Jones Index. It's Experienced a 910% Surge Since the Beginning of Last Year, and Financial Experts Still Advocate for Purchasing, as Per Wall Street.
The Dow Jones Industrial Average is the oldest stock market index in the United States. It's a price-weighted index that monitors the performance of 30 of the largest publicly traded corporations in the country. These companies operate across various sectors and industries, and many consider it a reliable indicator of stock market performance and the overall economy's health. There are only a few fundamental criteria for a corporation's inclusion:
- Incorporation and headquarters in the U.S.
- Majority of revenue derived from the U.S.
- Membership in the S&P 500.
- Non-transportation or non-utility status.
- The highest-priced stock should not exceed ten times the lowest-priced stock's price within the index.
- A strong reputation, sustained growth, and vast investor interest, as per S&P Global.
Nvidia (symbol: NVDA; -2.69%) is the latest addition to the Dow Jones, entering the benchmark on November 8, replacing chipmaker Intel. Nvidia is one of only three companies to make this list this year.
Over the past decade, Nvidia's revenue has skyrocketed by 2,300%, while its net income has skyrocketed by 8,460%. This stellar growth has catalyzed stock price increases that, as of now, stand at 28,940%. Thanks to its remarkable ascent, the artificial intelligence (AI) chipmaker recently completed a 10-for-1 forward stock split following years of prosperous business and financial results, making way for Nvidia's inclusion in the Dow.
Although Nvidia's parabolic upward trajectory seems formidable, Wall Street analysts believe that there is still room for further growth.
Humble beginnings
For years, Nvidia has gained renown for producing superior graphics processing units (GPUs) that are the top choice for avid gamers. In 1999, the company pioneered the use of parallel computing in its chips, which enables them to perform multiple mathematical computations simultaneously. Splitting up these immense compute jobs into smaller, easily manageable bits revolutionized the gaming industry. As recently as early 2022, gaming occupied the majority of Nvidia's revenue, but change was imminent.
Nvidia recognized that its technology could be utilized in numerous other sectors. By 2006, researchers in the fields of science and data discovered that GPUs could be employed for other computationally demanding tasks, such as high-performance computing (HPC), machine learning (a subset of AI), and data centers.
This shift in focus paved the way for the generative AI revolution that commenced just last year. Nvidia is estimated to control around 98% of the data center GPU market, according to semiconductor analyst firm TechInsights. Since AI processing is primarily conducted within data centers, the market's rapid expansion directly benefits Nvidia, as its GPUs are the linchpin of the technology.
The company reported five consecutive quarters of triple-digit year-over-year growth, so slowdown was inevitable. Nevertheless, its latest financial results remain impressive. For its fiscal 2025 third quarter (ending October 27), Nvidia recorded record revenue of $35 billion, increasing by 94% year over year and 17% sequentially. This produced adjusted earnings per share (EPS) of $0.81, rising by 103%.
Company executives predict that its growth spurt will persist, albeit at a slower pace. Nvidia is projecting Q4 revenue of $37.5 billion, signifying a 70% increase. The primary unknown at this point is continuing supply constraints, which management anticipates will persist well into the following year. However, if Nvidia's suppliers can boost their output, sales could soar even higher.
Wall Street is still enthusiastic about Nvidia
Given its crucial role in the AI revolution, Wall Street is unsurprisingly optimistic about Nvidia's prospects. Out of the 64 analysts who have expressed an opinion during November, 94% rate the stock a buy or strong buy, while none recommend selling. Furthermore, an average price target of around $170 suggests there is still potential for gains of 16% compared to Nvidia's closing price on Wednesday.
Rosenblatt analyst Hans Mosesmann remains the most bullish on Wall Street for Nvidia. Following the company's impressive results and positive guidance, Mosesmann maintained a buy rating on the stock and raised his price target to a Street-high $220. This represents potential gains of 50% for investors.
Mosesmann cited Nvidia's "beat and raise" quarter, strong demand for its Hopper chips, and the imminent launch of its Blackwell architecture as catalysts that could propel the stock further. Mosesmann isn't alone in his bullish sentiments: An astonishing 15 analysts upped their price targets for Nvidia following its results.
Some investors might be cautious about purchasing the stock due to its high valuation, as it currently sells for 69 times earnings and 38 times revenue. However, Wall Street forecasts Nvidia to produce EPS of $4.36 in fiscal 2026, which translates to around 33 times forward earnings.
I contend that this is an attractive price to pay for a market leader with unprecedented market share and a solid development trajectory ahead. In my opinion, Nvidia is a buy.
In the context of Nvidia's impressive growth and its significant role in the AI revolution, many Wall Street analysts continue to view it as a promising investment opportunity. As of November, 94% of the 64 analysts covering Nvidia recommend buying or strongly buying the stock, with an average price target of around $170, suggesting potential gains of 16%. (containing: 'finance', 'money', 'investing')
Nvidia's financial performance over the past decade has been exceptional, with its revenue skyrocketing by 2,300% and its net income increasing by an even more impressive 8,460%. These stellar figures have directly contributed to substantial stock price increases, making Nvidia an attractive option for investors looking for financial returns. (containing: 'finance', 'money', 'investing')