Nvidia holds a 25% potentiality or probability.
Tech giant Nvidia, a key player in the "Magnificent 7", has transitioned from producing gaming console chips to manufacturing crucial AI chips over the past few years. The company's stock has seen dramatic growth during this period. After reaching an unprecedented high of $140.76 on June 21, 2024, despite record-breaking sales and margins, its stock has started to decline under intense selling pressure.
Despite this, analysts at J.P. Morgan have maintained their buy recommendation for Nvidia stock, setting a target price of $155, citing robust figures and persistent strong demand for AI solutions.
Investment Strategy
Investors interested in Nvidia, the leading manufacturer of high-performance chips, can explore opportunities at its current level, approximately 16% lower than its all-time high at $118.10. For those looking to lower direct stock purchase risk, optionals called cap-bonus certificates present an appealing alternative. These instruments can deliver impressive double-digit annual returns with substantial safety net.
Direct purchase of Nvidia stock results in positive returns exclusively through a price increase and divident payments. However, cap-bonus certificates provide attractive annual returns even if prices remain steady or begin to fall.
Functionality
If Nvidia's stock stays within or below its threshold of $70 by the maturity date of the currency-hedged certificate (1 USD = 1 Euro), the certificate will be redeemed at its maximum redemption value of 130 Euros on December 30, 2025.
Fundamentals
The HVB cap-bonus certificate (ISIN: DE000HD7T0K4) associated with Nvidia stock features a bonus level and cap of 130 USD, which converts to 130 Euros due to currency hedging. The cap denotes the maximum payout of the certificate. The threshold, set until the valuation date of December 19, 2025, is fixed at 70 USD. At Nvidia's current cost of $118.10, investors can acquire the certificate at 103.60 Euros.
Potential
The certificate, currently available at 103.60 Euros, offers the possibility of a gross return of 25.48% (equivalent to 20% per year) in 15 months if the stock price does not dip 40.73% to 70 USD or lower by the valuation date.
Risks
If Nvidia's stock hits the 70 USD threshold by the valuation date, and the stock price remains below the cap at that point, the certificate will be redeemed at Nvidia's closing stock price on December 19, 2025.
This content serves only as an informational guide and does not advise purchasing or selling Nvidia stock or associated investment products. The data's accuracy cannot be guaranteed.
Nvidia continues to be a prominent name in the tech industry, with analysts at J.P. Morgan advocating for investment in its stock due to robust AI solutions demand and potential growth. Investors can explore buying Nvidia's high-performance chips directly or opt for cap-bonus certificates, offering attractive annual returns with a safety net, even in falling prices.
