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By Danny Vena
The Nasdaq Composite is a broad-based, tech-centric index tracking the performance of the more than 3,000 stocks listed on its exchange. In early July, the index hit a new all-time high, marking its sixth straight record close and its 27th so far this year. After that epic run, the Nasdaq is taking a well-deserved breather, down some 11% from its peak at recent prices. This has some investors wondering if the rally has run out of steam. Wall Street is weighing in and believes there's still more upside ahead.
XM Investment analyst Marios Hadjikyriacos is among the bulls. “Stock markets are enjoying the best of all worlds, buoyed by a resilient U.S. economy and speculation that Fed rate cuts are just around the corner, helping to justify stretched valuations,” he wrote. UBS analyst Mark Haefele concurs, saying, “All-time highs often generate investor concern that markets have peaked. Such worries are not supported by history,” he wrote in a note to clients.
Here are two Nasdaq stocks that still have plenty of room to run and could soar as much as 226%, according to select Wall Street analysts.
Nvidia: Implied upside 83%
The first Nasdaq stock with a boatload of potential is Nvidia (NVDA -4.01%). The semiconductor specialist has been one of the biggest early winners of the artificial intelligence (AI) revolution by providing the chips that make the technology possible. Nvidia's graphics processing units (GPUs) were already the gold standard for video games, data centers, and earlier branches of AI. The advent of generative AI early last year sent the company's sales and its stock price into the stratosphere.
Nvidia's most recent results help illustrate why. For its fiscal 2025 first quarter (ended April 28), record revenue of $26 billion surged 262% year over year, while earnings per share (EPS) of $5.98 soared 629%. Its data center segment, which includes data center and other AI chips, saw revenue of $22.6 billion jump 427%.
Despite stock price gains of more than 600% since early last year (as of this writing), Wall Street remains firmly behind Nvidia. Rosenblatt analyst Hans Mosesmann has a Street-high price target of $200 and a buy rating on the shares. This represents potential upside of 83% compared to Thursday's closing price.
Mosesmann believes the chipmaker's product pipeline doesn't get enough credit. “We see Nvidia's Hopper, Blackwell, and Rubin series driving ‘value' market share in one of Silicon Valley's most successful silicon/platform product cycles,” Mosesmann wrote.
The analyst isn't the only one bullish on Nvidia. Of the 58 analysts who offered an opinion on the stock in June, 53 rated the stock a buy or strong buy, and none recommended selling.
Some investors may be put off by Nvidia's valuation, but that view is myopic. At recent prices, the stock is selling for just 34 times forward earnings, but Nvidia's growth rate illustrates why that premium is well deserved.
CEO Says This Is Worth 9 Amazons
What in the world could be worth 9 Amazons?
The answer is a radical breakthrough that Wired says is “the rocket fuel of AI.”
Mobileye: Implied upside of 226%
The second Nasdaq stock with a wealth of upside ahead is Mobileye Global (MBLY -2.82%). The vast majority of the company's revenue comes from the advanced driver-assistance system (ADAS) it pioneered more than 20 years ago. That move was prescient, as Mobileye controls an estimated 70% of the market, expecting to increase its share to 75% by 2026.
The biggest opportunity, however, is the potential for more broad adoption of autonomous vehicle systems, better known as self-driving cars. Several high-profile companies, including Alphabet's Waymo, Tesla, and Baidu have all deployed self-driving technology, though most of these systems aren't yet ready for Primetime. However, last year, Mobileye was named as the industry leader in autonomous vehicle technology in two seperate reports issued by Guidehouse Insights and ABI Research.
That said, the lumpiness of Mobileye's business has sent many fair-weather investors to the sidelines — and therein lies the opportunity. For 2024, management is forecasting revenue of $1.6 billion at the midpoint of its guidance, representing a decline of about 27% year over year. As a result, the stock has shed more than 60% of its value so far this year. When Mobileye reported its results earlier this week, it cited a slowdown in auto production in the second half — primarily in China — for the reduction in its guidance. CEO Amnon Shashua was quick to point out that its guidance represents a “worst-case scenario,” which suggests that any improvement in the trajectory of its business could send the stock higher. That said, it's clear challenges remain.
One Wall Street analyst appears to be sticking to his guns. Despite a wave of price target reductions, Citi analyst Itay Michaeli hasn't updated his guidance post-earnings, maintaining a buy rating on Mobileye stock, with a price target of $53 (as of this writing). This represents potential upside of 226% compared to Thursday's closing price. The analyst calls the Q1 results “encouraging,” with potential customer wins representing potential catalysts for the remainder of this year. He goes on to say the underlying thesis “remains very much intact.”
Many on Wall Street seem to agree. Of the 27 analysts who covered the stock in June, 23 rated the stock a buy or strong buy, and none recommended selling.
Finally, at just 7 times forward sales, Mobileye is attractively priced, given the opportunity. Even a modest recovery in its business could send the stock soaring.
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