Nvidia: Implied Upside of 128%
Nvidia, a semiconductor company, tops the list of stock-split stocks with the greatest potential for upside in the coming year. Analyst Hans Mosesmann of Rosenblatt Securities has set a lofty $1,100 price target on Nvidia’s shares, representing a potential gain of 128% in 2024.
Mosesmann’s optimism stems from Nvidia’s involvement as the infrastructure backbone of the artificial intelligence (AI) movement. The company’s A100 and H100 graphics processing units (GPUs) currently dominate the high-compute data center market, accounting for 80% to 90% of the market share.
With Taiwan Semiconductor Manufacturing planning to increase chip production, the expectation is that Nvidia’s ability to meet the strong demand for its GPUs will improve. This increased supply should drive sales and profit growth for Nvidia in the coming year. However, there is a potential downside as well. The doubling of sales in Nvidia’s current fiscal year is primarily due to exceptional pricing power resulting from AI-GPU scarcity. As competition intensifies with the entry of Advanced Micro Devices and Intel into the AI-GPU arena, Nvidia’s pricing power and gross margin could suffer.
Amazon: Implied Upside of 56%
Amazon, the e-commerce giant, is another stock-split stock that analysts believe has significant upside potential in 2024. Analyst Alex Haissl of Redburn Atlantic has set a price target of $230 per share, implying a 56% increase in the new year.
While there are concerns about a potential decline in online revenue if economic growth slows or a recession occurs, Amazon’s e-commerce segment is not the primary driver of its cash flow and profitability. The company’s ancillary segments, such as Amazon Web Services (AWS) and advertising, hold the key to its future growth.
AWS, accounting for 31% of global cloud infrastructure services spend, is a critical segment for Amazon. As enterprise cloud spending continues to grow, AWS is well-positioned to benefit from this trend. Additionally, Amazon’s Prime subscription, with over 200 million users, generates consistent cash flow and keeps customers loyal to Amazon’s ecosystem. The company’s vast website traffic also attracts advertisers willing to pay a premium to reach potential customers.
Tesla: Implied Upside of 51%
Tesla, the electric vehicle (EV) maker, is the third stock-split stock forecasted to have significant upside in 2024. Analyst Adam Jonas at Morgan Stanley predicts that Tesla’s shares will reach $380, representing a 51% increase in the new year.
Tesla’s recent launch of its fifth production model, coupled with high demand for its Cybertruck, could drive sales growth. Unlike many legacy automakers, Tesla’s EV division consistently generates a recurring profit based on generally accepted accounting principles (GAAP), giving it a competitive advantage. However, Tesla faces challenges, such as a price war impacting its margins and unfulfilled promises regarding new vehicles and innovations. Additionally, Tesla’s already sky-high valuation presents a hurdle in reaching Jonas’s price target.
In conclusion, these stock-split stocks offer immense potential for investors in 2024. However, market dynamics, competitive pressures, and potential challenges should be considered before making investment decisions.