Grant Nvidia (NASDAQ:NVDA) A notable 214% rise in the stock price over the past year and with the stock still at an all-time high, you might not associate it with a favorable risk/reward profile right now.
However, that's exactly what Goldman Sachs' Toshiya Hari, a 5-star analyst ranked in the top 1% of stock professionals on the Street, believes. According to Harry, his analysis of the bull/bear market already indicates an “attractive risk/reward profile.”
To that end, Harry reiterated his Buy rating on NVDA stock and raised his price target from $625 to $800, suggesting the stock will rise 15% above current levels. (To watch Harry's record, click here)
The reason for Harry's optimism can be summed up in two letters: artificial intelligence. While the strides Nvidia has taken over the past year are due to growing demand for its best-in-class AI chips, there are plenty of reasons to believe the demand will continue.
“We no longer assume a decline in data center revenues in 2HCY24 and instead model flat growth through 1HCY25 driven by continued AI generation infrastructure spending by major cloud providers, an expanded customer profile, and multiple new product cycles (e.g. H200 , B100),” explained the analyst.
As with recent presentations, Harry expects Nvidia's FY4 (Jan) results and FY201 (April) outlook in the key data center segment to “demonstrate the continued shift in wallet share from general-purpose computing (i.e. CPU) in favor of computing Accelerated (i.e. GPU).
It is worth noting that there are many indicators within the larger ecosystem that point to a steady and strong demand for accelerated computing. These include early signs of AI monetization at companies like Microsoft and Meta. At the same time, hyperscale companies also appear to be ramping up AI-related capital spending. Plus, there's the fact that rival AMD has positively revised its 2024 data center GPU revenue forecast, raising it from $2 billion+ just three months ago to roughly $3.5 billion.
Although there is ongoing discussion about the potential growth of the data center business beyond 2024, given the above points (clear indications of continued investment in AI infrastructure by major telecom service providers, and an expanded customer base including specialist telecom service providers and governments) , and projected plans for product cycles through the end of fiscal year 2025), Harry is now “increasingly confident in the sustainability of the business”.
So, that's Goldman's view, but is the rest of the market equally bullish? Well, yes and no. On the one hand, the stock has a Strong Buy consensus rating based on 34 Buys versus 4 Holds. However, most seem to think stocks have risen enough for now; Thus, the average price target of $682.76 suggests that the stock will remain range-bound for the time being. (be seen Nvidia stock forecast)
To find good stock trading ideas at attractive valuations, visit TipRanks' Best Stocks to Buy, a tool that unites all of TipRanks' equity insights.
Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
“Infuriatingly humble alcohol fanatic. Unapologetic beer practitioner. Analyst.”