Thanks to the AI (Artificial Intelligence)-driven rally, Nvidia (NASDAQ:NVDA) stock has rallied quite a lot. Nonetheless, Hans Mosesmann of Rosenblatt Securities expects Nvidia stock to more than double over the next 12 months, implying it could go well beyond $1,000. Additionally, concerns over its valuation are easing, reflecting back-to-back strong quarterly beats and a solid outlook. Analysts, including Christopher Rolland of Susquehanna and Quinn Bolton of Needham, find NVDA’s current valuation reasonable, implying more upside potential.
On August 23, Mosesmann increased his estimates for Nvidia following the Q2 earnings and upbeat Q3 guidance. He said, “Nvidia’s epic print and guide two quarters in a row is simply unprecedented and just getting started.” He raised the price target to $1,100 (implying about 139% upside potential from current levels) from $800 and maintains a Buy rating.
Another analyst, Rolland, increased the price target on NVDA stock to $600 from $575, driven by solid demand and an improving supply chain. In a note to investors dated August 24, the analyst said that “the demand seems unbounded” in the near term. Moreover, Rolland considers NVDA’s valuation to be reasonable and raised his price target to $600 from $575. Meanwhile, Bolton sees Nvidia’s valuation attractive and finds the stock’s risk/reward profile “favorable.”
Although these analysts are upbeat about NVDA stock and see further upside, the company faces challenges ahead.
Key Challenges
While Nvidia is poised to capitalize on increased investment in generative AI, export restrictions to China (a key market for the company), emerging competition, and concerns over whether Nvidia could sustain the current growth rate pose challenges.
Bolton doesn’t believe the export limits will have a significant effect on NVDA in the near term, even though the ongoing U.S.-China chip war is still a cause for concern. Further, the analyst believes the reduction in sales from China would be “filled by other geographies.”
Further, on August 24, Goldman Sachs analyst Toshiya Hari said that he expects competition to increase from large cloud service providers. However, the analyst expects NVDA to maintain its lead in the foreseeable future. With this backdrop, let’s check how much Nvidia stock could rise further.
How Much is Nvidia Expected to Rise?
Analysts’ average 12-month price target of $631.8 implies a further upside potential of 37.22% from current levels. Despite the concerns around growth and competition, analysts maintain a bullish outlook.
With 38 Buy and one Hold recommendations, Nvidia stock has a Strong Buy consensus rating on TipRanks.
Bottom Line
Analysts see NVDA’s valuation as reasonable. In addition, the solid AI-led demand will enable Nvidia to deliver strong growth, driving its stock price higher. Further, significant cash flow generation will help Nvidia enhance its shareholders’ returns through share buybacks.
