In spite of an increase of 350% from the beginning of 2023, Nvidia stock continues to offer investors the opportunity to invest in a “compelling price” as well as AI demand still in its early stages according to Bank of America.
The bank raised the Nvidia Price target from $800 to $800 earlier on Thursday, offering a potential gains of 23% over the current price. Nvidia shares rose Nvidia rose by 5%, reaching a record record highest that was $661.19 the previous day.
“Early times, yet data from the most prestigious US cloud customers provide strong reasons to invest on GenAI,” Bank of America analyst Vivek Arya said.
The results of this week’s earnings from Meta Platforms, Microsoft, Amazon as well as Alphabet have revealed that AI investment is at the forefront of mind for the big-cap tech giants, as they try to improve their standing within the rapidly growing industry. It’s a good thing for Nvidia which creates and markets the GPU chips that power the majority of AI technologies.
It’s important to note that giant tech companies with the largest market share have the most to offer in AI spending, however there are many other businesses that are only beginning to plan the AI plan, and this will drive interest in Nvidia’s AI services for future years.
“Enterprise GenAI” adoption is yet to begin and increase in the CY25 and beyond, with Nvidia benefiting from its broad access to public cloud services and its unique partnership in partnership with ServiceNow, SAP VMWare Dell, HPE and many others,” Arya said.
Arya stated that he anticipates Nvidia to report a moderate earnings beat when it releases earnings later in the month, along with positive growth in earnings. In the long run, Arya sees Nvidia generating more than 40 cents for earnings per share.
“Nvidia is among the few large-cap tech stocks trading at a PE of 31x/25x for CY24/25 and less than its 45percent CY23-25 [estimated] CAGR of EPS. We can see a way to 40 percent EPS power in CY27E with $160 billionor more in accelerator TAM. It could be much more (maybe two times or even $80/share) If the TAM was to reach AMD’s (likely extremely high) $400 billion threshold,” Arya said.
The company’s revenue power is due to its dominant position in this market which is evident in Arya saying that it will hold a 95% share in the AI training market as well as a greater than 50% in the AI industry of inference.
“Nvidia’s variety of SKUs ranges from ~$1.2k to more than $30k which means that it won’t leave any area of the computing market unexplored,” Arya said.
