With a market share exceeding 90%, Nvidia (NASDAQ:NVDA) is undoubtedly the primary player in AI/data center acceleration, maintaining a dominant position that keeps rivals AMD and Intel far in the distance.
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For those wondering if such domination is sustainable over the long-term, Mizuho’s Vijay Rakesh, an analyst ranked in the top 1% of Street experts, has some reassuring words.
“We see the AI compute market growing 10x over the next 5 years to >$400B/yr as companies continue to invest in AI applications, with NVDA maintaining 75-90% market share throughout the ramp powered by its Grace and Hopper offerings,” the 5-star analyst explained. “With the push for greater AI adoption, we believe NVDA could potentially see a ~$65B revenue opportunity by C27E, up >4x from the $15B we saw in F23.”
That is a big jump from what has already been a massive revenue leap for Nvidia over the past year. The thing is, as Rakesh notes, at just ~1% AI server penetration in 2023E, it still accounts for a rather small chunk of the overall server market and it is expected that by 2027E, penetration could potentially reach 11%. As that takes place, Rakesh sees Nvidia maintaining its “strong share position as the market leader.”
Meanwhile, having begun shipping at the end of last year, the first deployments of its AI supercomputer, the DGX GH200, are in the pipeline. The initial customers are a roll call of AI heavyweights, featuring Alphabet, Meta and Microsoft.
While gaming revenues are also improving, the top-line shift towards Data Center (which already accounted for 80% of revenue in the October quarter) is expected to continue. Furthermore, given the “strong pricing power” of its Grace GPUs, this shift should provide a robust boost to margins. Another potential boost could come from Nvidia’s collaboration with ARM, as they work on processors aimed at the PC market, with a potential launch planned for next year.
All told, Rakesh rates NVDA shares a Buy while his $625 price target implies the stock will record gains of 21% over the course of the year. (To watch Rakesh’s track record, click here)
The Street’s average target is even a bit higher; at $660.77, the figure makes room for 12-month returns of 28.5%. Rating wise, most are also backing Nvidia’s case; based on a mix of 31 Buys and 4 Holds, the analyst consensus views the stock as a Strong Buy. (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.
