Prediction: Nvidia to grow more than 20% by the end of 2024 after strong sales

The thrill of victory and the agony of defeat.

Regular ABC viewers The wide world of sports I’ve heard the late Jim McKay say those words for decades. While McKay was referring to athletes, his phrase can also apply to stocks—including Nvidia (NVDA -0.21%).

Over the last few years, Nvidia has enjoyed the “thrill of victory”. Its stock has soared with demand for its graphics processing units (GPUs). More recently, however, Nvidia has somewhat tasted the “agony of defeat” with its stock falling.

However, I don’t think Nvidia will have this taste in their mouths for long. I predict that Nvidia stock will rise more than 20% by the end of 2024 after the big selloff.

The factors behind Nvidia’s steep decline

Before explaining the rationale behind my prediction, let’s first look at the factors behind Nvidia’s steep decline. Some are company specific, but not all.

In July, Bloomberg News reported that the Biden administration was considering further restrictions on exports of semiconductor equipment to China. Former President Donald Trump also said in an interview with Bloomberg Businessweek that Taiwan should pay the US to defend it. Both stories sent chip stocks tumbling.

Disappointing July employment figures in a report released on August 2 fueled fears of a potential US recession. Shares of Nvidia fell as the news weighed on the broader stock market.

The market was further shaken by the Bank of Japan’s interest rate hike. This move had a global impact as some investors borrowed money in Japan to take advantage of low rates and then invested the borrowed money in US stocks (including Nvidia) in what is called a “carry trade”.

Around the same time, news broke that Nvidia’s release of chips based on its new Blackwell architecture could be delayed by three months. The Information, a website focused on the technology sector, reported that Nvidia found a design flaw that caused the delay.

How Nvidia can come back

Why do I predict Nvidia stock will bounce back after all this bad news? First of all, the news is not as bad as it might seem at first glance.

So far, the Biden administration has not imposed any other restrictions on exports to China. It’s unclear whether Nvidia would be affected even if the changes are implemented. July’s disappointing jobs report was followed by lower-than-expected weekly jobless claims a few days later, easing fears of a recession.

JP Morgan Analysts believe about 75% of shipping deals affected by Japan’s rate hike have been cancelled. In other words, the worst is over.

Any delay in shipping the new Blackwell chips would hurt Nvidia’s sales growth. The good news is that the impact would only be temporary.

Importantly, Nvidia is scheduled to provide its Q2 fiscal 2025 update on August 28. I expect the company to easily beat Wall Street estimates again. I also think it’s likely that Nvidia will give a firm date for when Blackwell will start shipping, which isn’t too far in the future. The Q2 update could (and I think it will) clear the pack for Nvidia shares to resume their ascent.

Nvidia’s guidance could also reassure investors. Alphabet, Amazon, Microsoftand Meta platforms they said in their latest quarterly updates that they plan to spend heavily on AI infrastructure. This should translate into higher sales for Nvidia.

Finally, many analysts and economists expect the Federal Reserve to cut interest rates in September. I do too. And I think it’s very possible that this rate cut will be a catalyst for the stock market and help Nvidia stock rise.

The biggest threat to my prediction

I assume the US economy will remain relatively strong. But if the economy stumbles (and especially if there are signs of a recession starting), all bets are off. If that happens, Nvidia stock probably won’t rise 20% or more by the end of the year like we predicted.

However, the latest weekly jobless claims and the increased likelihood of rate cuts in the near future boost my confidence. I stand by my prediction about Nvidia. We’ll find out in a few months if I’m right.