Analysts highlight the stock's cheap valuation and the chip maker's central role in the AI ecosystem
Nvidia was worth $5.76 trillion as of Monday's close.
With Nvidia's stock booking its first new record close in four months, analysts are upbeat about what's ahead.
Nvidia shares (NVDA) finished Monday's session at $237.58, setting a fresh high that translates to a roughly $5.76 trillion market capitalization for the company.
While it may be hard to say a $5 trillion-plus company's stock is inexpensive, analysts claim you can easily make the case when looking at Nvidia's price-to-earnings multiple.
Wedbush analyst Matt Bryson told MarketWatch that as Nvidia gets closer to achieving its future financial estimates, "it is harder and harder for the market to ignore" the disconnect between its growth prospects and its valuation. The company is expected to grow at a 70% rate, but the stock trades cheaply at less than 20 times estimated earnings per share for its next fiscal year, he noted.
Nvidia is also "generating a ton of cash" and "seemingly willing to use a good portion of that" for stock buybacks, Bryson said.
See also: The murky AI milestone that has some of the industry's leading voices increasingly on edge
Recent enthusiasm for Nvidia's stock could also be linked to developments elsewhere in the chip industry. Elazar Advisors analyst Chaim Siegel told MarketWatch that Micron has seen memory-chip pricing hold up "a little better than expected."
Despite growing competition from its peers and even its own customers, Nvidia is still the "cornerstone of AI infrastructure," BNP Paribas analyst Karl Ackerman wrote in a note last week. He raised his price target to $345 a share, which implies 45% upside relative to the stock's price on Monday.
The company's portfolio of AI hardware and software is "unmatched and arguably becomes more important with agentic AI," Ackerman wrote.
Shares of Nvidia closed up 2.1% on Monday.
-Hannah Pedone