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Nvidia Corp. (NASDAQ:NVDA) shares came back up on Monday following the 14% decline they clocked in the week ended Sept. 6. An equity market strategist weighed in on the stock trajectory and the artificial intelligence stalwart’s valuation.
Reasonable Valuation: Nvidia shares are trading at a 26 times multiple, in line with Coca-Cola and Procter & Gamble but are poised to grow revenue by 30% in 2025 and by 20% the year after, said Chris Grisanti, chief equity strategist and portfolio manager at Mai Capital Management, in a CNBC interview. The valuation is fairly reasonable, he said. “So that's what makes us interested and that's what checks our boxes and it's also called Nvidia,” he added.
The strategist also said he wasn’t worried about the impact of a potential economic slowdown or inventory digestion by customers. “I'm not so afraid of that because they're not selling to consumers…..they're selling to Microsoft and Amazon AWS because these are businesses that are building out AI infrastructure,” he said.
Grisanti said these hyperscalers are stockpiling but they can afford it even if the economy goes south since they have long-term plans and they have cash to continue to fund it.
See Also: How To Buy Nvidia (NVDA) Stock
Imminent Risks: Grisanti said he was worried about possible competitors. “But we really don't see that yet,” he added. He also expressed worries about antitrust concerns, which recently drove down the stock.
The portfolio manager delved into valuation (based on forward price-earnings), which comes off as fairly inexpensive. “The market has a somewhat antiquated view of the semiconductor business,” he said, adding that semiconductors are to the 21st century what oil was to the 20th century.
A thriving economy can’t be had without semiconductors and these stocks have become less cyclical now than they were 10 to 15 years ago, Grisanti said. “AI is just this huge tailwind that can certainly get Nvidia through the next two to three years,” he added.
In premarket trading on Tuesday, Nvidia shares rose 0.24% to $106.73, according to Benzinga Pro data. The iShares Semiconductor ETF (NASDAQ:SOXX) edged down 0.17% to $207.61.
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