The tech-focused index continues to hit new highs, but Wall Street says some Nasdaq stocks still have plenty of room to climb.
THE Nasdaq Composite, which tracks the stock market performance of more than 3,000 publicly traded stocks, reached (again) a new all-time high this week. This is the 19th time this year that the benchmark index has reached new highs (as of this writing) and its longest winning streak since late 2021. There is likely much more to come, according to many sources on Wall Street.
Marios Hadjikyriacos, analyst at XM Investment, is one of them. “Stock markets are enjoying the best of all worlds, supported by a resilient U.S. economy and speculation that Fed rate cuts are imminent, helping to justify stretched valuations,” he writes. UBS Analyst Mark Haefele is also optimistic, noting that “all-time highs often cause investors to worry that markets have peaked.” Such concerns are not supported by history,” he advised worried investors.
Despite hitting new highs, a number of Nasdaq’s top stocks still have plenty of room to run and could soar as much as 97%, according to some Wall Street analysts.
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Nvidia: implied increase of 53%
The top Nasdaq stock with a lot of upside potential is Nvidia (NVDA -3.22%). The chipmaker was an early beneficiary of the artificial intelligence (AI) revolution in the form of a game of picks and shovels. The term refers to a famous quote attributed to Mark Twain: “During the gold rush is a good time to get into the pick and shovel business.” » In this case, AI is the gold rush, and Nvidia is in the picks and shovels business.
Specifically, Nvidia provides the benchmark graphics processing units (GPUs) that process data, supporting the latest advances in generative AI. The company was an early adopter of AI, focusing on the nascent technology more than a decade ago. This prescient decision paid off, giving Nvidia a significant lead over the competition.
Nvidia’s most recent results illustrate the extent of this advance. For its first fiscal quarter 2025 (ended April 28), Nvidia’s revenue soared 262% year-over-year to a record $26 billion, while earnings per share (EPS) soared 629% to $5.98. The company’s data center segment, which includes AI chips, was the biggest contributor, with revenue of $22.6 billion up 427%.
Despite the stock price rising 215% over the past year (as of this writing), Wall Street remains resolutely positive. Rosenblatt analyst Hans Mosesmann increased his price target to $200 while maintaining a buy rating on the shares. This represents a 53% upside potential from Monday’s closing price.
Mosesmann is optimistic about Nvidia’s chips but notes that “the real story is the software that complements all the hardware goodness.” The analyst goes on to suggest that Nvidia’s market cap will reach nearly $5 trillion in the coming year.
The analyst is not the only one to be optimistic about Nvidia. Of the 57 analysts who gave their opinion on the stock in May, 53 rated the stock a Buy or Strong Buy, and none recommended sale.
At 52 times forward earnings, Nvidia isn’t cheap. However, this is a reasonable price for a company generating triple-digit sales and profit growth and enjoying such strong long-term tailwinds.
Super Micro Computer: implied increase of 69%
Another Nasdaq stock with further upside potential is Super microcomputer (SMCI -1.35%), also known as Supermicro. The company provides cutting-edge servers with the latest high-end processors designed to provide the computing power needed for AI.
What gives Supermicro an edge is its consistent focus on energy efficiency, plug-and-play solution assortment, and modular architecture. This allows customers to tailor their systems to their needs and budget. Additionally, the company offers a wide variety of solutions, including free-air, liquid, and traditional air cooling technology, to meet everyone’s needs.
During Supermicro’s third quarter of fiscal 2024 (ended March 31), revenue soared 201% year-over-year to $3.85 billion, while its EPS adjusted jumped 329% to $6.56. An expansion of its production facilities will help the company meet growing demand, increasing its production potential to support annual revenue of $25 billion.
Despite a spectacular 301% rise over the past 12 months, some on Wall Street believe there’s more to come. Loop Capital analyst Ananda Baruah has a $1,500 price target and a buy rating on the shares. This represents potential gains of 69% for investors from Monday’s closing price.
The analyst cited Supermicro’s ability to address both complexity and scale as the reason for its leading position in the AI server market. It further suggests that Supermicro will generate $40 billion in revenue by the close of fiscal 2026, well ahead of the company’s $15 billion forecast for this year.
The analyst is not the only one to be optimistic about Supermicro. Of the 16 analysts who gave their opinion on the stock in April, 12 rated the stock as a Buy or Strong Buy, and none recommended sale.
Plus, with only 2x next year’s sales, Supermicro is a steal at this price.
Baidu: implied increase of 97%
The last Nasdaq stock in our trio with a lot of upside potential is Baidu (TO START -0.25%), often called the “Google of China”. According to Internet statistics aggregator StatCounter, the company is the dominant Internet search provider in China, with more than 52% of the market. Like its American counterpart, Baidu has a trove of data, which forms the backbone of its digital advertising business and generates the lion’s share of the company’s revenue.
Perhaps more importantly, Baidu is one of China’s leaders in generative AI, with the capabilities of its Ernie Bot 4.0 rivaling those of OpenAI’s large GPT-4 language model.
In the first quarter, Baidu’s total revenue of $4.4 billion increased 1% year-over-year, although its EPS of $2.07 fell 6%. As China’s struggling economy weighed on Baidu’s bottom line, the company continued to invest money in its AI program, which it said would boost future revenue and profits.
A Wall Street analyst believes a turnaround is on the horizon. Benchmark analyst Fawne Jiang has a Buy rating on Baidu stock and a price target of $180. This represents a 97% upside potential from Monday’s closing price. The analyst points out that this was the lowest quarter for Baidu’s ad revenue, but was offset by 12% growth in Baidu’s AI cloud business, representing a important opportunity for the future.
The analyst is part of a growing group on Wall Street that believes Baidu offers an attractive opportunity. Of the 36 analysts who gave their opinion on the stock in May, 32 rated the stock a Buy or Strong Buy, and none recommended sale.
Finally, at only 12 times earnings, Baidu has very little built-in growth. Even a modest recovery in China’s economy, which some say has already begun, could send the stock soaring.