We’re raising our price targets on the Investing Club’s only “own it, don’t trade it” stocks — Nvidia and Apple — two mega-cap tech names that have been winners this year with more room to run. Nvidia We’re boosting our Nvidia price target to $150 per share from $120 — representing an increase of more than 20% from Monday’s close. The artificial intelligence giant, which briefly became the most valuable U.S. company a couple of weeks ago, has come off the boil a bit recently. On Tuesday, it was just hanging onto a $3 trillion market cap. For investors with no Nvidia exposure, the stock on Tuesday was near one of three possible buy levels we identified last week . It dipped briefly below intraday Monday. We’re considering an upgrade from our wait-for-a-pullback 2 rating given the stock’s roughly 12% decline from last month’s all-time intraday high of nearly $141 to Monday’s close. However, in 2024 alone, the stock is up over 145% — far and away our best performer this year. But given that run, we’re reiterating our wait-for-a-pullback 2 rating for now. NVDA 5Y mountain Nvidia 5 years As strong as Nvidia shares have been since their October 2022 closing low of $11.23 each – an over 1,000% surge since then – we continue to see further strength ahead. The catalysts include sustained demand for the company’s AI hardware solutions along with the upside potential from its growing services offerings. After soaring on earnings in May and gaining ground since last month’s 10-for-1 stock split, the primary concern behind the stock’s recent decline has been whether Nvidia’s clients might pause hardware spending as the chipmaker transitions from its Hopper suite to the new Blackwell architecture. That worry is misplaced because industry checks continue to indicate that won’t be the case. The need for accelerated computing is too great and the vast majority of the world’s data centers were not built from the ground up with AI workloads in mind. As a result, we believe companies big and small are in the early stages of a massive investment cycle. Nvidia’s services revenue is not yet material to earnings, but we continue to see several avenues for growth. Nvidia has solutions for many key industries including health care and autonomous vehicles. We believe the addressable markets for those verticals are large and only getting larger. Health care revenue at Nvidia has already exceeded a $1 billion run rate. The company is also proving to be a key partner for many of the world’s auto industry OEMs (original equipment manufacturers). The expectation is that Nvidia will share in the revenue streams associated with self-driving vehicle subscriptions. Back in 2021, at the Nvidia investor day conference, founder and CEO Jensen Huang provided an example of how big the auto market could be one day. “There are 100 million cars sold a year and that’s the entire opportunity annually for chips, 100 million cars.” At the time, Jensen said hypothetically if there’s $1,000 worth of Nvidia hardware in each car, that’s a $100 billion opportunity. “However, those cars are driven 10 trillion miles,” he estimated. If Nvidia were to get $1 per mile as part of a services subscription, he projected, “It’s $10 trillion – and so, that kind of gives you a sense of the economics involved.” However you want to slice it, when we consider that current revenue estimates are for Nvidia to do $120 billion this fiscal year, with only $1.4 billion coming from automotive, it’s clear that this segment alone has the potential to materially impact total revenues over the coming decade. Bottom line : Near-term we expect the yet-to-be-shipped Blackwell chip platform to result in continued growth. However, we see plenty of opportunities for even more growth as we look longer-term to these new services-oriented opportunities. Apple We’re also increasing our Apple price target to $240 per share from $220. But we’re reiterating our 2 rating with the stock back to all-time highs intraday Tuesday. The stock had a rough start to the year. But it bottomed in mid-April and found its footing. Then better-than-feared earnings in early May catapulted the stock higher. It got another boost in June after the company unveiled its artificial intelligence strategy. Like other tech stocks, Apple dipped recently. But unlike Nvidia, that weakness was short-lived. AAPL 5Y mountain Apple 5 years We like what we saw at Apple’s annual Worldwide Developers Conference (WWDC) and continue to believe that the inability to leverage the new Apple Intelligence AI offering on anything less than last year’s iPhone 15 Pro provides the setup for one of the strongest refresh cycles we’ve seen in years. Keep in mind, we haven’t even seen what new features the iPhone 16 will have beyond the AI tools. New iPhone launch events are usually in September. In addition to a hardware upgrade cycle, we think the introduction of generative AI and integrating it more deeply with users’ personal devices – in a way only Apple can – will provide for a new level of service opportunities, resulting in a greater share of revenue coming from this recurring, high-margin segment of the operation. Bottom line : We think the introduction of Apple Intelligence — as well as the potential for what spatial computing (the mixed reality Vision Pro headset) can become as the form factor of devices (and prices) decrease —represents the beginning of a new generation for Apple. (Jim Cramer’s Charitable Trust is long NVDA, AAPL. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. 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HANGZHOU, CHINA – JUNE 3, 2024 – The NVIDIA logo and the Apple logo are pictured in Hangzhou city, Zhejiang province, China, June 6, 2024. On June 5, Eastern time, Nvidia’s stock market value exceeded $3 trillion, officially surpassing Apple’s market value and becoming the world’s second largest technology giant by market value. It is worth noting that in just over 3 months, Nvidia’s market value soared from $2 trillion to $3 trillion. (Photo credit should read CFOTO/Future Publishing via Getty Images)
Cfoto | Future Publishing | Getty Images
