The Nasdaq Composite, which tracks the stock performance of the more than 3,000 stocks listed on the exchange, hit a new all-time high (again) this week. This marks the 19th time this year the benchmark has ascended to new heights (as of this writing) and its longest winning streak since late 2021. There's likely much more to come, according to numerous sources on Wall Street.
XM Investment analyst Marios Hadjikyriacos is counted among those. "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 is also bullish, noting, "All-time highs often generate investor concern that markets have peaked. Such worries are not supported by history," he counseled concerned investors.
Despite reaching new heights, a number of high-profile Nasdaq stocks still have plenty of room to run and could soar as much as 97%, according to select Wall Street analysts.
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Nvidia: Implied upside of 53%
The first Nasdaq stock with plenty of upside is Nvidia (NVDA -1.91%). The chipmaker has been one of the earliest beneficiaries of the artificial intelligence (AI) revolution as a picks-and-shovels play. The term references a famous quote attributed to Mark Twain: "During the gold rush, it's a good time to be in the pick and shovel business." In this case, AI is the gold rush, and Nvidia is in the picks-and-shovels business.
More specifically, Nvidia supplies the gold-standard graphics processing units (GPUs) that process the data, underpinning the latest advances in generative AI. The company was among the earliest converts to AI, turning its focus to the nascent technology more than a decade ago. That prescient move has paid off in a big way, giving Nvidia a significant lead on the competition.
Nvidia's most recent results illustrate the magnitude of that lead. For its fiscal 2025 first quarter (ended April 28), Nvidia's revenue soared 262% year over year to a record $26 billion, while earnings per share (EPS) skyrocketed 629% to $5.98. The company's data center segment, which includes AI chips, was the biggest contributor, as revenue of $22.6 billion jumped 427%.
Despite posting a stock price increase of 215% over the past year (as of this writing), Wall Street remains steadfastly positive. Rosenblatt analyst Hans Mosesmann increased his price target to $200 while maintaining a buy rating on the shares. That represents potential upside of 53% compared to Monday's closing price.
Mosesmann is bullish on Nvidia's chips but notes that "the real narrative lies in the software that complements all the hardware goodness." The analyst goes on to suggest that Nvidia's market cap will climb to nearly $5 trillion over the coming year.
The analyst isn't the only one bullish on Nvidia. Of the 57 analysts who offered an opinion on the stock in May, 53 rated the stock a buy or strong buy, and none recommended selling.
At 52 times forward earnings, Nvidia isn't cheap. However, it's a reasonable price for a company generating triple-digit sales and profit growth and benefiting from such strong secular tailwinds.
Super Micro Computer: Implied upside of 69%
Another Nasdaq stock with additional upside is Super Micro Computer (SMCI 7.12%), also known as Supermicro. The company supplies state-of-the-art servers packed with the latest high-end processors designed to provide the computational horsepower necessary for AI.
What gives Supermicro an edge is its relentless focus on energy efficiency, assortment of plug-and-play solutions, and building-block architecture. This allows customers to tailor systems to meet their needs and budget. Furthermore, the company offers a wide variety of solutions, including free-air, liquid-cooling, and traditional air-cooling technology, providing something for everyone.
In Supermicro's fiscal 2024 third quarter (ended March 31), revenue soared 201% year over year to $3.85 billion, while its adjusted EPS surged 329% to $6.56. An expansion of its production facilities will help the company meet the accelerating demand, increasing its production potential to support $25 billion in sales annually.
Despite the stock rising a spectacular 301% 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. That represents potential gains of 69% for investors compared to Monday's closing price.
The analyst cited Supermicro's ability to deliver on both complexity and scale as a reason for its leadership position in the AI server market. He further suggests that Supermicro will deliver a $40 billion revenue run rate by the close of fiscal 2026, well ahead of the company's guidance of $15 billion this year.
The analyst isn't the only one bullish on Supermicro. Of the 16 analysts who offered an opinion on the stock in April, 12 rated the stock a buy or strong buy, and none recommended selling.
Furthermore, at just 2 times next year's sales, Supermicro is a steal at this price.
Baidu: Implied upside of 97%
The final Nasdaq stock in our trio with plenty of upside is Baidu (BIDU -1.34%), often called the "Google of China." According to internet statistics aggregator StatCounter, the company is the dominant provider of internet search in China, with more than 52% of the market. Like its U.S. counterpart, Baidu boasts a veritable treasure trove of data, which forms the backbone of its digital advertising business and generates the lion's share of the company's revenue.
Perhaps as importantly, Baidu is one of China's generative AI leaders, with the capabilities of its Ernie Bot 4.0 rivaling those of OpenAI's GPT-4 large language model.
In the first quarter, Baidu's total revenue of $4.4 billion edged 1% higher year over year, though its EPS of $2.07 fell 6%. While the struggling Chinese economy weighed on Baidu's results, the company continued to pour money into its AI program, which it said would drive future revenue and profits higher.
One 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 potential upside of 97% compared to Monday's closing price. The analyst points out that this was Baidu's seasonal low quarter for ad revenue, but it was offset by 12% growth from Baidu's AI cloud business, which represents a significant opportunity going forward.
The analyst is part of a growing cadre on Wall Street that believes Baidu offers a compelling opportunity. Of the 36 analysts who offered an opinion on the stock in May, 32 rated the stock a buy or strong buy, and none recommended selling.
Finally, at just 12 times earnings, Baidu has very little growth priced in. Even a modest recovery in China's economy, which some believe has already begun, could send the stock soaring.
