Nvidia Stock: Tempting? Sure, But It Isn’t a Buy Just Yet, Says Goldman Sachs

Wall Street’s gaze has turned to Nvidia (NVDA), with last week’s fall GTC (GPU Technology Conference) drawing plenty of attention.

CEO Jensen Huang’s keynote pointed to the products and developments being made at the chip giant and Goldman Sachs’ Toshiya Hari has been taking notes.

“In short,” said the 5-star analyst, “we came away from the event with a constructive view on the competitiveness of the upcoming RTX 4000 series of GPUs, although we await for more data points to truly understand how resilient GPU demand is and will be going forward, especially when juxtaposed with continuous negative revisions to PC volumes and deteriorating consumer sentiment driven by elevated inflation.”

The new GPUs are powered by the Ada Lovelace architecture and while Hari notes that the performance metrics suggest a meaningful improvement in ray-tracing, they don’t come cheap, with the new models priced “well above” their prior-generation counterparts. Therefore, the analyst wonders how much of an appetite there will be for these pricier iterations in the current environment.

Elsewhere, Hari is “increasingly” appreciative of the “niche opportunity” that the company is going after with its Grace Hopper Superchip. The Grace Hopper platform seems poised to meet the specific requirements of recommender systems, which depend on fast-memory capacity an order of magnitude higher than other kinds of AI models. Nvidia’s “focused approach,” says Hari, can “yield greater traction” and improve the chances of adoption.

Further down the line – or 2025 to be more precise – should see the “inflection” of the automotive opportunity via the partnerships with Mercedes-Benz and Jaguar Land Rover. While Hari notes the ramp of the Automotive segment has “lagged some investors’ expectations,” with Mercedes-Benz anticipated to ship its first car based on Nvidia’s DRIVE platform in late 2025 and Jaguar Land Rover shortly afterwards, Hari says near-term progress is “especially important to monitor given that the company has sized the automotive opportunity more broadly at $300 billion.”

So, time to turn bullish again on Nvidia? Not quite. Hari is still sitting this one out, recommending a Neutral rating, although the $162 price target still makes room for 12-month returns of 32%. (To watch Hari’s track record, click here)

8 other analysts join Hari on the sidelines, although with an additional 23 Buys, the Street rates this stock a Moderate Buy. Most think the shares are significantly undervalued; going by the $205.74 average target, they will deliver gains of 68% in the year ahead. (See Nvidia stock forecast on TipRanks)

To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.

Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.