NVIDIA Surpasses $4 Trillion Market Cap, But Analysts See Limited Upside
Investors are increasingly questioning whether the tech giant’s explosive growth can continue as valuations climb.
NVIDIA Corporation (NASDAQ:) achieved a historic milestone on Thursday, becoming the first company globally to surpass a $4 trillion market capitalization during trading. The stock reached a new all-time high of $164.42, fueled by continued demand for its AI chips. However, despite this impressive feat, growing concerns among analysts suggest that further substantial gains may be limited.
Rebound From April Lows Amidst Tariff Concerns
NVIDIA’s surge represents a remarkable recovery. Since bottoming out in April – a period marked by heightened market anxiety surrounding proposed tariffs from the Trump administration – the company’s stock has rebounded by over 88%. Interestingly, Thursday’s trading session also saw renewed tariff concerns following new announcements from Donald Trump. However, a slightly dovish tone in the Federal Reserve’s meeting minutes, released later in the day, helped to bolster investor confidence during the second half of the session.
Lagging Momentum Compared to Previous Years
While NVIDIA has posted a gain of over 21% compared to the start of the year, making it the second-best performer among the “Magnificent 7” – trailing only Meta Platforms (NASDAQ:) – this performance represents a noticeable slowdown. Last year saw a staggering 171% surge, and in 2023, the increase was even more substantial at 239%.
Valuation Concerns and the “Magnificent 7”
Both analysts and valuation models are now indicating limited further upside for NVIDIA at its current levels. This sentiment appears to extend to most of the “Magnificent 7,” which have all demonstrated strong upward trends over the past three months but are facing increasing scrutiny regarding their future potential. According to InvestingPro’s Fair Value model, which aggregates several recognized valuation frameworks, NVIDIA, Meta Platforms, Microsoft (NASDAQ:), Tesla (NASDAQ:), and Apple (NASDAQ:) currently exhibit negative potential. Amazon (NASDAQ:) and Alphabet (NASDAQ:) show only limited upside.
Average analyst price targets corroborate this cautious outlook. While none of the “Magnificent 7” stocks are currently rated negatively, none are expected to deliver substantial gains either. Alphabet currently holds the highest potential, with an average target suggesting a 12% increase from current levels.
Shifting Focus to Lesser-Known Tech Stocks
Despite the ongoing AI boom and other positive catalysts that could continue to support NVIDIA and its peers, experts suggest these tech giants may no longer represent the most explosive opportunities in the current phase of the bull market. “It’s time to think outside the box to find the best technology stocks,” one analyst noted.
The most attractive opportunities may now lie in lesser-known names, identified by strategies like InvestingPro’s “Tech Titans” strategy. This AI-powered strategy identifies promising U.S. tech stocks each month, providing detailed justifications for each selection and removal. The strategy has demonstrated impressive long-term performance, exceeding +2,370%.
InvestingPro’s Tech Titans Strategy: A Proven Track Record
Over the years, the “Tech Titans” strategy has consistently outperformed by identifying emerging trends before they become mainstream. Recent successes include several major wins in 2023 and 2024. Notably, 95% of the stocks identified by the strategy at the beginning of June finished the month with gains, and July is also showing strong early results.
The strategy’s transparency is a key differentiator. For example, a position in Axcelis was closed on July 1 with a +46.6% gain, accompanied by a comprehensive rationale. The “Tech Titans” strategy is just one of over 30 AI-managed strategies available, catering to diverse investor goals and risk tolerances.
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Disclaimer: This article is written for informational purposes only. It is not intended to encourage the purchase of assets in any way, nor does it constitute a solicitation, offer, recommendation, or suggestion to invest. All assets are evaluated from multiple perspectives and are highly risky, so any investment decision and the associated risk belongs to the investor. We also do not provide any investment advisory services.
