Goldman Sachs Pounds the Table on Nvidia Stock

The bull market might be on hiatus for now but once the narrative turns positive again, one tech giant is poised for further gains.

That at least is the message relayed by Goldman Sachs analyst Toshiya Hari when looking at Nvidia’s (NASDAQ:NVDA) prospects, the semiconductor juggernaut whom he calls the “principal ‘shovel supplier’ in the AI ‘gold rush.’”

“Look for NVDA to maintain its status as the accelerated computing industry standard for the foreseeable future given its competitive moat and the urgency with which customers are developing and deploying increasingly complex AI models,” says the 5-star analyst. “And a strong and broadening demand profile in the Data Center, plus an improving supply backdrop should support sustained revenue growth through CY2024.”

Basically, Hari’s message for those concerned that the massive amount of business generated by Nvidia’s Data Center segment is about to cool off, is don’t fret. The fact sales in this key end market nearly tripled from the same period a year ago in the July quarter, underscores how important Nvidia’s GPUs have become for hyperscale customers seeking to boost computing capabilities for a wide selection of clients.

And while there appears to be no lack of demand, the problem has been one of supply, but here the issues are abating. In line with the discussions Hari had within the industry, management confirmed during the earnings call in August that they anticipate sequential supply increases through the end of calendar year 2024. This increase is expected to result from ongoing collaborations with supply chain partners to tackle critical bottlenecks, advanced packaging included.

NVDA is also selling a greater proportion of its higher-margin products and is reaping the rewards of significant operating leverage. This is evident as the growth in SG&A (selling, general, and administrative) costs lags far behind the pace of revenue growth, and that is not about to reverse. “Look for continued healthy opex leverage ahead,” Says Hari, “as the company continues to penetrate new markets and applications with its common GPU platform approach – all helping to support a recently announced $25bn share repurchase authorization.”

All told, these comments underpin Hari’s Buy rating, which is backed by a $605 price target, implying shares will post gains of 39% in the months ahead. (To watch Hari’s track record, click here)

Nvidia is that rare beast – a stock with plenty of coverage where almost everyone is in agreement. With 39 Buy ratings and 1 single Hold, the message is clear: NVDA is a Strong Buy. If this wasn’t enough, the $644.69 average price target implies that shares could surge 47% in the next twelve months. (See Nvidia stock forecast)

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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.