The 10-for-1 stock split that happened after Friday’s close has caused Nvidia Corp. stock to trade near $120 on Monday.
For investors who are used to seeing Nvidia share prices NVDA, +0.75% close to $1,200, the lower stock price after the split may come as a shock. But it hasn’t been that long since Nvidia shares were worth about $120 before the split. This shows how quickly the company has grown over the past few years.
Prices for Nvidia shares before the split were last seen at $120 in October 2022. That’s another way to show that Nvidia’s stock price went up by 900% in less than two years.
Analysts think the price will go up even more. Matthew Ramsay of TD Cowen changed his model to account for the split over the weekend, “proving we can divide by 10,” and raised his split-adjusted price target from $120 to $140.
In his most recent note, Ramsay also added estimates for data centres over a longer period of time to his model. He wrote, “Overall, this long-term model shows that Nvidia will be able to generate nearly $6.00 in (split-adjusted, so that’s really $60 in EPS as of last week) earnings” by 2030.
He thinks that’s “a relatively conservative estimate” because the company has “significant levers available to it, such as share repurchase and ongoing margin leverage.”
There is a big difference between Ramsay’s base case estimate of $6 earnings per share and his bull case estimate of nearly $15 earnings per share for 2023.
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For investors who think Nvidia already has a lot of power in the S&P 500 SPX, Evercore ISI analyst Mark Lipacis showed how the stock could get even stronger in the index. He pointed out that Nvidia has about the same weight in the S&P 500 as Apple Inc., at around 6% to 7%. There is still a lot of change in the market, though, so Lipacis thinks Nvidia’s share could rise to 10% to 15%.
“In each new era of computing, we have seen that the dominant ecosystem players have become more important to the S&P 500,” he wrote in a report over the weekend.
