Today's market seems to be all over the hype stories found in the world of technology stocks. This is especially the case with blowout performances by names like Nvidia Corporation (NASDAQ: NVDA), which keep breaking past their all-time high prices as if there is no resistance to their prices. While some may be turned away from buying a winner at a high price, the pros understand the ceiling is far from priced in.

Wall Street professionals confidently point to a higher price for NVDA stock. That suggests that the wave that started a couple of quarters ago is far from over. You are about to find out why Nvidia will keep delivering blockbuster financial results in the coming months. They are the same reasons that price targets are being boosted higher and higher.

More than that, markets are showing no signs of concern on the back of the stock's massive rally recently. All it takes is for you to be able to read the market's language that two simple ratios will reveal. But before you get yourself in the weeds of translating this message, you must first understand what is happening under the hood.

Follow the money

According to its 2024 macro outlook report, The Goldman Sachs Group Inc. (NYSE: GS) and its analysts projected a breakout – more like a turnaround – in the manufacturing sector of the United States economy. This makes sense once you realize what the Federal Reserve (the Fed) is planning behind the scenes.

By proposing a pivot to its policy, the Federal Reserve is signaling an interest rate cut in the coming months. How soon, you ask? According to the FedWatch tool at the CME Group Inc. (NASDAQ: CME), traders are beginning to price in these potential rates by May or June of this year.

Lower interest rates offer a more attractive proposition for foreign nations to buy American-made exports. That's just good old economics. However, to have enough products to export, these firms need to manufacture them. That's where Goldman's expected breakout comes from, but here's how that's good for Nvidia.

Because Nvidia has a unique value in their Graphics Processing Units (GPUs), the need to optimize the efficiency of these manufacturers comes down to Nvidia to provide them with these chips powerful enough to pre-design their assembly processes and factories before even the first dollar of Capital Expenditure (CAPEX) goes out.

Now baptized as Extended Reality (XR), these GPUs are transforming the way industrial names work by optimizing design speeds and simulation capacities and, of course, driving margins higher for everyone.

See the connection? More manufacturing activity could directly tie to Nvidia's XR chip demand. But don't just take this idea at face value; check where the big money is going.

X on the map

It should come as no surprise to learn that the same Goldman analysts who pointed to a breakout in manufacturing are now boosting their NVDA price targets up to $875 a share. This reflects a net upside of as much as 11% from where the stock trades today.

Some value investors may argue that other names in the semiconductor industry could represent a better proposition due to their lower prices, names like Intel Co. (NASDAQ: INTC) and Micron Technology Inc. (NASDAQ: MU), which trade at much lower multiples than Nvidia may be a trap rather than an opportunity.

Starting with size, the market is screaming at you just how confident it is in Nvidia. With a $1.7 trillion market capitalization, it is fathoms above Intel's $188 billion and Micron's $87 billion. The question now revolves around where the market is willing to price these stocks and what that decision means.

The semiconductor industry trades at an average price-to-book (P/B) ratio of 8.6x today, and what you are looking for is positive outliers, in other words, stocks that the market is willing to pay a premium valuation for. Remember the saying "It must be expensive for a reason" here.

NVDA stock is valued at 53.9x P/B, whereas Intel and Micron trade for 1.7x and 2.0x multiples, respectively. The opposite also applies here: "It must be cheap for a reason." There is nothing against the upside in Intel and Micron; all the market is saying that the explosive demand driving fantastic financial results is only found in Nvidia today.

Now you have a better idea of why this willingness to overpay is, the only question is, is that too high a price for your new watchlist addition to consider?