Everyone is at it, and it looks like no one wants to miss out. A recent common activity on Wall Street has been to raise the price target for Nvidia (NASDAQ:NVDA) shares. After a blowout 2023 based on exceptional results, driven by its standing as the undisputed leading maker of AI chips, analysts have recently been adjusting their models, and raising targets based on a belief the AI opportunity has yet to fully play out.
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That said, without the actual need for any adjustments, Loop Capital’s 5-star analyst, Ananda Baruah, has decided to jump right in and take all other forecasts out.
The top analyst recently initiated coverage of NVDA stock with a Buy rating and a Street-high $1,200 price target, suggesting the shares have room for further growth of 65% from current levels. (To watch Baruah’s track record, click here)
What propels Baruah’s bullish stance? “We believe not only is there material upside to Street estimates in CY2024/FY2025 & CY2025/FY2026 but that we are at the front end of a 3 – 5 year GPU compute & Gen AI foundational build across Hyperscale,” the analyst explained. “While we acknowledge additional silicon providers (private as well as AMD & INTC) and Hyperscale specific internal silicon solutions will be coming online over the next few years, our work suggests NVDA’s largest customers will be taking everything NVDA can give them in 2024 and 2025.”
Driven by Data Center GPUs, Baruah expects respective revenue & EPS in CY2024/FY2025 of $132.4 billion & $30.00, compared to the Street at $95.8 billion & $21.76. In CY2025/FY2026, Baruah sees those figures at $175.6 billion & $40.00, vs. consensus at a respective $110 billion & $24.84.
If that’s not bullish enough, via both revenue and GM expansion, Baruah also thinks there’s “legitimate upside potential to even our above Street estimates.”
While the immediate reaction is to think Baruah might be going overboard here, it’s worth considering that since the Generative AI opportunity kicked off a year ago, Nvidia’s quarterly results show a “distinct pattern of pronounced beats.”
The reason why Baruah is that much more confident than the general Wall Street view is a rather simple one. Basically, Baruah thinks Nvidia is about to sell far more high-end Data Center GPUs than other analysts currently expect. For CY2024/FY2025, Baruah sees Nvidia tracking towards 5.0 million (and 6.5 million+ for CY2025/FY2026). Based on investor conversations, Baruah thinks the Street is expecting a total of 4.0–4.5 million Enterprise & Data Center GPUs across the same period.
Looking at the consensus breakdown, most of Baruah’s colleagues are of a bullish bent, too. Based on 37 Buys vs. 3 Holds, the stock claims a Strong Buy consensus rating. That said, some appear to think a cooling down period for the stock is in order; the $746.91 average target suggests the shares will remain rangebound for the time being. (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.
