Nvidia’s stock, NVDA, bounced back on Monday after a 14% decline the previous week. Chris Grisanti, chief equity strategist and portfolio manager at Mai Capital Management, weighed in on the stock’s trajectory and Nvidia’s valuation during a CNBC interview. He believes the company’s valuation is reasonable, considering its expected revenue growth.
Grisanti points out that Nvidia shares are trading at a 26 times multiple, comparable to established companies like Coca-Cola and Procter & Gamble. However, Nvidia is poised for significant revenue growth, with projections of 30% growth in 2025 and 20% in 2026. This combination of valuation and growth potential makes Nvidia an attractive investment, according to Grisanti.
The strategist also dismissed concerns about a potential economic slowdown, emphasizing that Nvidia’s primary customers are not consumers but rather businesses like Microsoft and Amazon AWS, who are building out AI infrastructure. These companies are stockpiling Nvidia’s products, and their long-term plans and financial strength allow them to continue investing even in a challenging economic environment.
While Grisanti acknowledges potential risks from competitors and antitrust concerns, he believes these threats are currently manageable. He emphasizes the market’s somewhat outdated view of the semiconductor industry, arguing that semiconductors are the equivalent of oil for the 21st century. A thriving economy depends on semiconductors, and their importance has made the sector less cyclical than it was in the past.
Grisanti is optimistic about Nvidia’s future, stating that AI is a strong tailwind that will likely propel the company’s growth for the next two to three years. Nvidia’s premarket trading on Tuesday reflected this optimism, with shares rising 0.24% to $106.73.
This rebound suggests that investors are confident in Nvidia’s continued success, driven by the increasing demand for AI and the company’s strong position in the semiconductor market.
