Given Nvidia’s (NASDAQ:NVDA) remarkable 214% surge in share price over the past year and with the stock sitting at just about an all-time high, you might not associate it with a favorable risk/reward profile right now.
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That, however, is exactly what Goldman Sachs’ Toshiya Hari, a 5-star analyst rated in the top 1% of the Street’s stock pros, believes. According to Hari, his bull/bear analysis indeed indicates an “attractive risk/reward profile.”
To this end, Hari reiterated a Buy rating on NVDA shares and raised his price target from $625 to $800, suggesting the stock will climb 15% higher from current levels. (To watch Hari’s track record, click here)
The reason for Hari’s optimism can be summed up by two letters: AI. While the huge strides taken by Nvidia over the past year have been down to the soaring demand for its best-in-class AI chips, there’s plenty of reason to believe that demand is set to continue.
“We no longer assume a drop off in Data Center revenue in 2HCY24 and instead model consistent growth through 1HCY25 driven by continued spending on Gen AI infrastructure by the large cloud service providers, a broadening customer profile, and multiple new product cycles (e.g. H200, B100),” the analyst explained.
As with recent showings, Hari anticipates Nvidia’s FY4Q (January) results and FY1Q (April) outlook in its main Data Center segment to “illustrate the ongoing wallet share shift from general-purpose compute (i.e. CPU) in favor of accelerated computing (i.e. GPU).”
Significantly, there are several indicators within the larger ecosystem pointing toward consistent and robust demand for accelerated computing. These include early signs of AI monetization at companies such as Microsoft and Meta. At the same time, hyperscalers also appear to also be ramping up AI-related capital spending. Additionally, there’s the fact rival AMD made a positive revision to its 2024 Data Center GPU revenue outlook, raising it from $2 billion+ just three months ago to ~$3.5 billion.
And while there is an ongoing discussion about the potential growth of the Data Center business beyond CY2024, given the points made above (clear indications of ongoing investment in Gen AI infrastructure by major CSPs, an expanding customer base including specialized CSPs and governments, and anticipated product cycles through the end of CY2025), Hari is now “increasingly confident in the business’ sustainability.”
So, that’s the Goldman view, but is the rest of the Street just as bullish? Well, yes and no. On the one hand, the stock claims a Strong Buy consensus rating based on 34 Buys vs. 4 Holds. However, most appear to think the shares have soared enough for now; hence, the $682.76 average price target suggests the stock 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.
