Nvidia (NASDAQ:NVDA) shares have nearly tripled in value over the past 12 months, and the company’s dominance as the undisputed AI chip king remains unchallenged. With this strong momentum, a delay in the shipment of its latest GPU architecture, Blackwell, hardly suggests a looming crisis.
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However, as noted by Susquehanna’s Christopher Rolland, a 5-star analyst rated in the top 1% of the Street’s stock pros, it’s a development investors are closely monitoring.
With this in mind, Rolland has turned his attention to the sustainability of the current Hopper GPU cycle. “In short,” says the analyst, “Hopper pricing is holding up well.”
After analyzing pricing and availability trends, Rolland highlighted several key points. Aftermarket prices for the H100 have remained “relatively stable,” hovering just below $30,000, with a slight decrease of 0.6% in Q3. Additionally, no increase in H100 availability on the secondary market has been observed. Cloud pricing for the H100 has also seen a minor decrease, averaging $5.32 per hour – down 4% since the start of 2024. At these rates, with a 70% utilization, cloud service providers (CSPs) renting out H100 units can expect a short “hardware payback” period of around five months, bolstering continued investment by platform providers.
On another issue, Rolland ponders whether Nvidia should be eyeing an acquisition of optical and/or analog interconnect technologies. “As GPU clusters scale linearly, the need for interconnections grows exponentially,” says Rolland. “Given the expected growth in cost and importance, NVIDIA might consider insourcing or acquiring companies with leading technological positions in linear equalizers, TIAs, laser drivers, PICs, silicon photonics, DSPs, and/or on-board optics.”
So, which companies might fit the profile? Lumentum Holdings, Coherent, Applied Optoelectronics, Semtech, Marvell, Lightmatter, and Ayar Labs are just some of the names mentioned.
All told, Rolland rates NVDA shares a Positive (i.e., Buy) along with a $160 price target. The implication for investors? Upside of 32% from current levels. (To watch Rolland’s track record, click here)
Rolland’s take is hardly a controversial one on Wall Street; 38 other analysts join him in the bull camp, easily overwhelming 3 Holds and resulting in a Strong Buy consensus rating. The average price target currently stands at $152.44, which implies a one-year returns of ~26%. (See Nvidia stock forecast)
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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.
