Nvidia is 'central to the growing tech story': Strategist

Nvidia (NVDA) announced a 10-for-1 stock split alongside its positive first-quarter earnings print. The chip-making giant continues its run reaching quadruple digits in stock price — up over 115% year-to-date — with little signs of slowing down.

Freedom Capital Markets Chief Global Strategist Jay Woods joins Wealth! to give insight into Nvidia's performance, its planned stock split, and more.

Woods puts Nvidia's performance into perspective:

"This quarter they made $26 billion in revenue. In 2022, It was $27 billion. So in one quarter they matched what was a weak year, a down year, but it's the growth continues to rise. 600% year-over-year net income, 500% year-over-year EPS. Five years ago, it was a $100 billion company. Now it's $2.5 trillion. And then you look at who their customers are. They're the biggest companies in the world. The Amazon (AMZN), the Alphabet GOOG, GOOGL), the Microsoft (MSFT) of the world...So is it early innings? I say maybe the third, but it's a stock that you need to be in because it's so central to the growing tech story that we're in now."

For more of everything Nvidia, catch Yahoo Finance's exclusive interview with CEO Jensen Huang.

For more expert insight and the latest market action, click here to watch this full episode of Wealth!

This post was written by Nicholas Jacobino

Video Transcript

Well, the A I trade flexing some muscle today as part of its quarterly performance report and video also announcing its latest 10 for one stock split here with me.

Now we've got Jay Woods Freedom Capital Markets Chief Global strategist, Jake.

Great to see you in the building here.

Great to be here.

I mean, what a time to be alive.

We're sitting here talking about a company that used to be the darling for crypto traders out there and a bunch of gamers.

Now it's got friends in every corner of the world here and they just announced this 10 for one stock split.

Does it become more appealing after an announcement like that?

Well, if you own it and I got calls from parents from, from friends, I put in the stock.

They, they feel like they won something like, hey, I I've got 10 more shares.

We beat the split.

They did.

This is their fifth split since 2001st, since 2021 4 for one stock split.

And what it means for the retail investors, it's cheaper to get in.

Uh If you own it, you're gonna have 10 times more shares the value is the same, but it does feel great when you own a stock that splits.

What it also could mean, it could mean it could get added to the indexes.

The Dow Jones industrial average is price weighted, not market cap.

So maybe we saw Amazon go in after a 20 for one stock split.

Uh, kicked out Walgreens Boots Alliance.

I would be, you know, uh, so not a conspiracy theorist.

I, I think it's real to think maybe intel your time has come 20 years in the Dow Cisco, uh and NVIDIA, it's more relevant and given that, you know, the data centers and the fan of growth, we continue to see it would be fitting to be in the Dow and now it's more uh price advantageous to do so.

Yeah, you know, one of the huge things that we think about is the bellwether that NVIDIA has really been for the sentiment in the markets.

How long can that be the case?

It can be the case for a long time.

I mean, you have Dan Ives on the show all the time and he talks about early innings 1995 moment and I happen to agree with him the their growth trajectory.

Let's just put it in perspective.

This quarter, they made $26 billion in revenue in 2022 it was $27 billion.

So in one quarter, they matched what was a weak year down year but it's, the growth continues to rise.

Uh 600% year over year, net income, 500% year over year.

Uh eps, you know, five years ago, it was $100 billion company now it's 2.5 trillion.

And then you look at who their customers are.

They're the biggest companies in the world, the Amazon, the alphabet, the Microsoft of the world.

So their story continues to grow and it grows, you know, exponentially.

So, is it early innings?

I, I say maybe the third, but it's, it's a stock that you need to be in because it's so central to the growing tech story that we're in.

Now, Jay, I'm gonna play this clip for our viewers here who maybe weren't able to tune into Morning brief when we were speaking with John Vin, uh about his own outlook and what some of the catalysts are for the stock right now.

I know you don't have an IFB, I'll break it down for you in a hot second here.

Let's play this for the viewers real quick.

I think there's still very favorable risk reward on NVIDIA here.

You know, we think that they can do close to $50 in earnings and you know, that sort of earnings power, you know, NVIDIA is trading uh very attractively relative to its broader peers, right?

Kind of in the high teens, low twenties multiple, which is um very attractive from a valuation perspective from our, from our point of view.

All right.

So John saying $50 in earnings, we could see NVIDIA eventually get to what would need to happen.

What would they need to continue to get right in order to hit that mark?

Well, they're on the trajectory right now.

They just have to keep doing what they're doing.

Uh They could be head ones with Taiwan.

I know people are worried if there's a conflict between China and Taiwan and, and Jensen has said, and I think he said it to Julie in that great interview before that, that is the center of their world.

So if there's a rattle there, then then possibly, but no, the the data center exponential growth is tremendous.

The their partnership with continued partners are great and then the competition, they may nip at their heels but they're not really making a dent and the Blackwell chip, he already announced that and then the chip that's gonna replace that down the road.

So their innovation continues to be 12 steps ahead of the competition.

So the multiples are justified and that pe ratio, you, you go back to.com people like to compare this to the.com bubble, maybe it's the beginning of a bubble, but they're the leader of the bubble.

It's these A I companies that come later and IP OS that come later, that will signify the bubble.

They continue to lead.

I think the valuation is justified and uh it's gonna grow for some time to come.