Nvidia has arguably been the most important company for the stock market in 2023!

Why?

It’s jumped over 250% for the year…..an unprecedented amount for a stock already at a market cap of around $364 billion.

Here are a few reasons to be bullish on the stock going into 2024…

Historically Low Forward P/E

It may be tempting to assume that the stock is trading extremely expensive given how much it rallied this year.

With how much revenue and EPS have gone up though, it is actually relatively cheap.

Take a look at the divergence between the share price and the 12-month forward P/E…

As the price went up, the forward P/E kept dropping.

This is because the EPS growth has outpaced the stock price increase…

It’s important to keep in mind that forward P/Es are an estimate using analyst projections for future growth.

I believe these numbers are on the conservative side for 2024…

This means that the true forward P/E might be even lower than expected!

Generative AI-based Services Coming in 2024

While AI services targeted at consumers received lots of buzz over the past 11 months, 2024 will likely be the year where things really hit the ground running. 

This was emphasized during Microsoft’s Ignite conference, where Copilot and other services were front and center… 

Microsoft’s aggressive moves in the space will likely act as a huge catalyst for competitors to push out similar services next year.

How does this benefit Nvidia?

This will require even more generative AI-ready GPUs, which are already in incredibly high demand.

Nvidia’s Software Stack

Naysayers are quick to argue that it’s only a matter of time before the competition catches up to Nvidia.

While competitors will likely make some headway, I don’t think it will be as significant as many are anticipating…

People often forget that Nvidia has a large dominance on the software side of things as well.

As enterprise customers get comfortable using Nvidia’s AI enterprise software solutions, it will be very difficult for them to switch to a competitor such as AMD.

That’s all for now!

Until Next Time,

-Damian