NVIDIA’s Record High Raises a Bigger Question About How Far the Rally Can Run

Key Points

• NVIDIA broke out of a major trading range and reached a new all-time intraday high on Oct. 2.
• NVIDIA’s analyst targets and earnings outlook remain bullish as Vera Rubin ramps and AI infrastructure demand expands.
• NVIDIA’s growth continues to benefit semiconductor and memory partners, although supply constraints remain a key risk.

NVIDIA’s NASDAQ: NVDA stock price did something interesting in early October, rising to a new all-time high. The move broke the stock out of a significant trading range, extended the trend, and points to a continuation in the upcoming months and quarters.

Technically, the move brings several target projections into play, suggesting the stock can rise by solid double digits in the near term and by high-triple-digit amounts in the long term, setting the stage for this $5.7 trillion company to be worth $10. Investors should consider that doubling to a $10 trillion valuation. Investors should consider that reaching a $10 trillion valuation could happen within the next year or two, and may be only a stepping stone on the way to what this company may really be worth.

Technical targets are based on the existing range’s magnitude and the rally that came before it. They amount to $40 and $65 moves that, when projected from the breakout point, target $275 and $300. The $275 to $300 range is coincidentally just below the analysts' consensus price target of $320.71, strengthening the case for NVIDIA’s modest near-term upside potential.

Trends Matter: NVIDIA and AI Are Not a Bubble

Trends matter for stock prices because the market tries to front-run everything, and rising or falling targets lead it to conclusions. In the case of NVIDIA analysts, the trend is upward, with MarketBeat data revealing coverage rising, sentiment firm, a bullish bias in the data, and price targets leading to the high end of $515, sufficient for more than 100% upside from the early October breakout point and well above the technical targets.

The latest coverage includes commentary from DBS Group’s chief investment officer, Hou Wey Fook. Fook Fook pointed to Bloomberg-compiled data showing NVIDIA trades at about 17 times 12-month forward earnings. and questioned how AI can be a bubble at that multiple. NVIDIA normally trades in the 30x to 35x range, a premium once tied to its GPUs, and historical bubbles, including the DotCom bubble, saw valuations skyrocket into the triple digits before they burst. Looking ahead, NVIDIA remains an execution story, with the 10-year outlook suggesting the stock trades at pennies on the dollar.

Earnings estimates also point to continued rapid growth. The company is expected to grow earnings by approximately 70% over the next year, and the consensus could prove conservative. NVIDIA itself expects volume sales to double, underpinned by the Vera Rubin release. It could unleash another wave of data center construction, since Oracle NASDAQ: ORCL and many hyperscale/neocloud backlogs are tied to next-gen technology. The takeaway for investors is that NVIDIA’s AI growth story remains intact, and that is very bullish for its ecosystem partners, AI generally, the tech industry, and the S&P 500 index.

NVIDIA’s Ecosystem Partners: A Powerhouse Portfolio of Tech Leadership

The number one beneficiary of NVIDIA’s ecosystem dominance is Taiwan Semiconductor Manufacturing Company NYSE: TSM. The company is a key foundry and advanced packaging partner for NVIDIA’s GPUs, CPUs, and interconnect technology. It benefits from volume, scale leverage, and demand for higher-margin advanced packaging services that add up to sustained, double-digit revenue growth and accelerating profitability.

Micron NASDAQ: MU and SK Hynix NASDAQ: SKHY are likewise well-positioned for NVIDIA’s growth surge. Together, they account for nearly 100% of the high-bandwidth memory (HBM) market, which is critical to AI at all levels. They benefit from exponentially growing demand, as each NVIDIA GPU relies on numerous stacks of HBM chips, and from supply constraints. Current forecasts suggest memory supply will remain tight through at least 2027, with Micron indicating that shortages could take considerable time to ease.

The implications for the S&P 500 are equally robust, with tech strength expected throughout the infrastructure, hardware and software systems. More importantly, rapidly expanding capacity is driving application, which is driving new capacity demand in a virtuous cycle. Bottlenecks, including hardware, power, and permitting, exist and threaten to slow AI's progress, but they are incremental and may slow, rather than derail, the long-term outlook. In the long term, businesses, enterprises, agencies, and sovereign governments need AI to unlock efficiency and advancement; the build-out will continue, and the companies monetizing it could see their stock prices rise.

NVIDIA’s biggest risk is obsolescence, but it is working hard to keep the demon at bay. Investments in software, hardware, and applications are paying off, cementing it as the global base layer for AI. Catalysts include the upcoming Q3 earnings release, estimated for Nov. 18. Analysts expect 90% revenue and earnings growth, and investors are likely to be pleasantly surprised. Blackwell is in full production, with demand exceeding supply.