Nvidia is expected to be the best performer in the S&P 500 through 2025, by this measure

By Philip van Doorn

Next Wednesday's earnings report could be another catalyst as Nvidia continues to dominate the AI hardware build-out

Investors have gotten used to incredible year-over-year comparisons during the past several quarters for Nvidia Corp., which continues to lead the market for graphics-processing units being deployed by data centers to support their corporate clients' build-out of artificial-intelligence technology.

Nvidia (NVDA) is scheduled to announce results for the fourth quarter of its fiscal 2024 next Wednesday at 5 p.m. Eastern time. The consensus among analysts polled by FactSet is for the company to report quarterly sales of $20.28 billion, up from $6.05 billion a year earlier.

A year-over-year comparison of the company's sales results doesn't tell the full story. Nvidia's sales increased rapidly during each of the past three quarters as GPU sales for AI deployment - essentially a new market last year - took off. The quarterly sales number of $20.28 billion expected next week would be a 12% sequential increase from the $18.12 billion during the company's third quarter of its fiscal 2024, which ended Oct. 29.

Nvidia's soaring sales and profits have set the stage for its shares to more than triple in value over the past year. So an important question for investors now is how long the company can maintain a high pace of growth for sales.

To help answer that question, we screened consensus sales estimates among analysts polled by FactSet for the S&P 500 SPX. We used FactSet's adjusted calendar-year numbers for the estimates, with 2023 as a baseline. So the 2023 numbers are actual for companies whose fiscal years match the calendar and that have already reported their fourth-quarter results. For other companies - about 20% of the S&P 500 - with fiscal years that don't match the calendar, the 2023 numbers are estimates based mainly on results reported last year.

Based on the consensus estimates through calendar 2025, these 20 companies in the S&P 500 are expected to show the highest compound annual growth rates for sales. The sales estimates are in millions.

   Company                              Ticker   Two-year est. sales CAGR through 2025  Est. 2023 sales  Est. 2024 sales  Est. 2025 sales  Price/ 2025 EPS estimate  Price/ 2025 sales-per-share estimate 
   Nvidia Corp.                          NVDA                                    38.9%          $56,430          $90,505         $108,861                      29.9                                  16.8 
   Micron Technology Inc.                 MU                                     35.8%          $17,927          $25,871          $33,053                      12.1                                   2.7 
   First Solar Inc.                      FSLR                                    27.2%           $3,482           $4,563           $5,632                       7.6                                   3.0 
   Newmont Corp.                         NEM                                     24.7%          $11,314          $16,613          $17,597                      12.7                                   2.1 
   Blackstone Inc.                        BX                                     24.7%           $9,791          $12,552          $15,228                      20.9                                  10.1 
   Diamondback Energy Inc.               FANG                                    22.2%           $8,236           $8,720          $12,291                       8.5                                   2.5 
   Eli Lilly & Co.                       LLY                                     21.9%          $34,123          $41,112          $50,669                      42.1                                  14.2 
   Take-Two Interactive Software Inc.    TTWO                                    21.6%           $5,298           $6,690           $7,835                      19.0                                   3.4 
   Broadcom Inc.                         AVGO                                    21.0%          $38,133          $50,697          $55,842                      22.2                                  10.6 
   ServiceNow Inc.                       NOW                                     21.0%           $8,971          $10,896          $13,137                      49.5                                  12.4 
   Axon Enterprise Inc.                  AXON                                    20.8%           $1,552           $1,879           $2,265                      50.4                                   9.0 
   Advanced Micro Devices Inc.           AMD                                     19.9%          $22,680          $25,965          $32,615                      32.7                                   8.9 
   Insulet Corp.                         PODD                                    19.5%           $1,648           $1,979           $2,353                      56.1                                   5.6 
   DexCom Inc.                           DXCM                                    19.2%           $3,622           $4,323           $5,146                      52.5                                   8.7 
   Oneok Inc.                            OKE                                     18.8%          $19,034          $24,991          $26,864                      12.8                                   1.5 
   Palo Alto Networks Inc.               PANW                                    18.4%           $7,428           $8,827          $10,408                      52.4                                  11.2 
   Tesla Inc.                            TSLA                                    18.0%          $96,775         $111,142         $134,764                      44.6                                   4.5 
   Targa Resources Corp.                 TRGP                                    17.8%          $15,610          $19,202          $21,670                      12.5                                   0.9 
   Extra Space Storage Inc.              EXR                                     17.4%           $2,440           $2,959           $3,362                      25.3                                   9.1 
   Western Digital Corp.                 WDC                                     16.6%          $12,493          $14,736          $17,000                       9.6                                   1.1 
                                                                                                                                                                                          Source: FactSet 

Click on the tickers for more about each company, fund or index.

Click here for Tomi Kilgore's detailed guide to the wealth of information available for free on the MarketWatch quote page.

We have included price-to-earnings and price-to-sales figures, based on Feb. 14 closing prices and consensus estimates for calendar 2025. In comparison, the S&P 500 trades for 18.2 times the weighted aggregate consensus estimate for 2025 and 2.5 times the weighted sales estimate for that year. The S&P 500's expected two-year sales CAGR through 2025, based on the weighted consensus estimates, is 5.3%.

So Nividia's price ratios based on the 2025 estimates are high, but you pay a premium for rapid sales growth. And its price-to-sales ratio is high relative to the price-to-earnings ratio because the company's marginal profit is so high for the GPUs.

Let's end with a summary of analysts' opinions of these stocks. Keep in mind that most analysts working for brokerage firms set 12-month price targets, which may be considered a relatively short period for long-term growth investors.

   Company                              Ticker   Share buy ratings  Share neutral ratings  Share sell ratings  Feb. 14 price  Consensus price target  Implied 12-month upside potential 
   Nvidia Corp.                          NVDA                  92%                     8%                  0%        $739.00                 $711.50                                -4% 
   Micron Technology Inc.                 MU                   75%                    22%                  3%         $81.83                  $99.55                                22% 
   First Solar Inc.                      FSLR                  82%                    18%                  0%        $158.24                 $224.71                                42% 
   Newmont Corp.                         NEM                   61%                    35%                  4%         $32.12                  $47.50                                48% 
   Blackstone Inc.                        BX                   46%                    54%                  0%        $127.95                 $126.45                                -1% 
   Diamondback Energy Inc.               FANG                  83%                    17%                  0%        $169.86                 $187.96                                11% 
   Eli Lilly & Co.                       LLY                   74%                    19%                  7%        $757.31                 $755.75                                 0% 
   Take-Two Interactive Software Inc.    TTWO                  78%                    18%                  4%        $155.72                 $176.04                                13% 
   Broadcom Inc.                         AVGO                  71%                    29%                  0%      $1,262.22               $1,234.98                                -2% 
   ServiceNow Inc.                       NOW                   88%                    12%                  0%        $792.00                 $847.31                                 7% 
   Axon Enterprise Inc.                  AXON                  85%                    15%                  0%        $270.84                 $264.38                                -2% 
   Advanced Micro Devices Inc.           AMD                   76%                    22%                  2%        $178.70                 $193.38                                 8% 

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02-17-24 0715ET

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