[ad_1]
Given Nvidia (NASDAQ:NVDA) remarkable 214% increase in share price over the past year and with the stock at a near all-time high, you might not associate it with a favorable risk/reward profile right now.
That, however, is exactly what Goldman Sachs’ Toshiya Hari, a five-star analyst ranked in the top 1% of stock market professionals on the Street, believes. According to Hari, his bullish/bearish analysis indeed indicates an “attractive risk/reward profile.”
To this end, Hari reiterated a Buy rating on NVDA stock and raised his price target from $625 to $800, suggesting the stock will rise 15% from current levels. (To view Hari’s history, click here)
The reason for Hari’s optimism can be summed up in two letters: AI. While the big strides made by Nvidia over the past year are due to growing demand for its best AI chips, there is every reason to believe that demand will continue.
“We no longer assume a decline in data center revenue in 2HCY24 and instead model steady growth through 1HCY25 driven by continued spending on Gen AI infrastructure by large cloud service providers, a increasingly broad customer profile and multiple cycles of new products (e.g. H200, B100),” the analyst explained.
As with recent filings, Hari anticipates that Nvidia’s fiscal 4Q (January) results and fiscal 1Q (April) outlook in its core data center segment “illustrate the continued shift in wallet share.” from general purpose computing (i.e. CPU) to accelerated computing (i.e. GPU).).”
Significantly, there are several indicators within the broader ecosystem that point towards consistent and strong demand for accelerated computing. These include early signs of AI monetization at companies like Microsoft and Meta. At the same time, hyperscalers also appear to be increasing AI-related capital spending. Plus, there’s the fact that rival AMD made a positive revision to its data center GPU revenue outlook for 2024, raising it from over $2 billion just three months ago to ~$3.5 billion .
And while there is an ongoing debate about the potential growth of the data center business beyond fiscal 2024, given the points mentioned above (clear indications of continued investment in Gen AI infrastructure by major CSPs, a base of expanding customers including specialty CSPs and governments, and expectations for anticipated product cycles through the end of fiscal 2025), Hari is now “increasingly confident in the sustainability of the business.”
So, that’s Goldman’s view, but is the rest of the stock market just as optimistic? Well, yes and no. On the one hand, the stock claims a Strong Buy consensus rating based on 34 Buys vs. 4 Holds. However, most seem to think the stock has risen enough for now; Therefore, the average price target of $682.76 suggests the stock will remain range-bound for the time being. (See Nvidia Stock Forecast)
To find good ideas for stocks trading 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.