Truist raises Nvidia stock target: 'Number one can become number one-er'

Nvidia (NASDAQ:NVDA) became the number one company in terms of market valuation and it can now become “number on-er,” Truist Securities analysts said in a Wednesday note.

On June 18, Nvidia’s market cap climbed to $3.34 trillion, overtaking Microsoft (NASDAQ:MSFT) as the world’s most valuable public company. However, the chipmaker’s shares then fell in several consecutive sessions, losing the top position.

“We considered that, even if fundamentals cooperate, stock upside could be limited owing to trading and technical challenges related to NVDA's #1 market cap position,” Truist analysts wrote.

However, the firm said its comprehensive analysis of the data indicates “that becoming the largest company by market cap does not appear to systematically challenge future investment returns.”

Truist evaluated the investment returns and valuations of stocks that have achieved the largest market capitalization over the past 26 years. These stocks include Microsoft, Cisco (NASDAQ:CSCO), ExxonMobil (NYSE:XOM), Apple (NASDAQ:AAPL), and Amazon (NASDAQ:AMZN).

The analysis revealed that most of these stocks underperformed relative to the S&P 500 index over short-term periods of one week, one month, and three months following their initial ascent to the top market cap position. However, in the longer term, the stocks generally outperformed the S&P 500 over one-year, three-year, and five-year periods, the investment bank noted.

Overall, analysts continue to view NVDA as the top choice for investing in the AI theme. Citing recent feedback from industry contacts, including component buyers and sellers, they note that there is ongoing and broadening demand for Nvidia's GPU systems. While Blackwell systems are particularly favored, Hopper systems are also being well received.

Within this, the investment bank raised its price target on NVDA shares from $128 to $140.