Analysts unveil new stock price target for Nvidia ahead of earnings

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FEBRUARY 14, 2024

Jensen Huang, co-founder and chief executive officer of Nvidia Corp. I-HWA CHENG/Getty Images

Nvidia’s  (NVDA)  got a chip on its shoulder.

The Santa Clara, Calif.-based company, which has seen its market value more than triple over the past year, has solidified its place as the world’s biggest producer of chips for artificial-intelligence applications.

Artificial intelligence, or AI, makes it possible for machines to learn from experience, adjust to new inputs and perform human-like tasks.

AI is expected to contribute $15.7 trillion to the global economy by 2030, according to one survey, and 9 out of 10 organizations said they support AI for gaining a competitive edge over rivals.

Nvidia has a big advantage in the AI game, since the company’s software and graphic processing units, or GPUs, are much better suited to handle AI’s heavy workloads than the traditional central processing units, or CPUs, deployed in most enterprise and cloud networks.

Nvidia’s sales and profit have skyrocketed as the need to update networks to handle AI demand has increased.

Sales of Nvidia’s AI chips, including the A100 and H200, surged some 206% to $18.1 billion in the third quarter.

Analysts boost their price targets

Colette Kress, Nvidia’s executive vice president and chief financial officer, said during the company’s Nov.22 analysts’ call that “the enterprise wave of AI adoption is now beginning.”

“Enterprise software companies such as Adobe, Databricks, Snowflake, and ServiceNow are adding AI copilots and assistants with their pipelines,” she said, according to a transcript of the call.

“And broader enterprises are developing custom AI for vertical industry applications such as Tesla and autonomous driving,” she added.

Nvidia is scheduled to report fourth-quarter earnings on Feb. 21. Analysts surveyed by FactSet expect the company to post earnings of $4.56 a share on revenue of $20.2 billion.

A year ago, Nvidia earned 88 cents a share on $6.1 billion in sales.

Analysts are expecting big things from the company’s latest earnings report.

Mizuho boosted its price target on Nvidia to $825 from $625 dollars while keeping a buy rating on the shares.  Analysts increased estimates and expect strong earnings from the company.

The firm sees a steady first half of 2024 ramps, followed by an accelerating artificial intelligence ramp in the second-half of the year. Mizuho said that it continues to see Nvidia as the best AI machine learning play.

UBS raised its price target on Nvidia to $850 from $580 and keeps a buy rating on the shares. UBS said it expects a strong earnings beat and raise when Nvidia reports next week.

The firm said that customer discussions confirmed that Nvidia’s lead times have come in substantially over the past month past few months.

Fear of missing out?

UBS says demand for AI compute capacity is still strong in the near term and thinks this points to significant upside potential to shipments and revenue.

The firm said it sees enough capacity for Nvidia to guide $25 billion to $26 billion in total revenue.

Earlier this month, Goldman Sachs analyst Toshiya Hari added Nvidia stock to the investment bank’s conviction buy list.

Hari lifted his price target on Nvidia by $175 to $800 per share, a level he said could be achieved over the next 12 months.

“We believe Nvidia will remain the industry gold standard for the foreseeable future given its robust hardware and software offerings and the pace at which it continues to innovate,” Hari wrote.

Not everybody is on the Nvidia bandwagon.

Evercore ISI senior managing director Julian Emanuel said on CNBC recently that he believes Nvidia’s incredible rally is fueling a fear of missing out–FOMO–in the market.

He said that clients, including many who traded through the dot-com boom and subsequent collapse, are more worried about being underinvested than overexposed.

“That’s the first time that’s happened since 2021 for us,” he said. “That’s a bit of an alarm bell.”

TheStreet.com contributor Kenio Fontes wrote on Feb. 12, “Although Nvidia has a proven history of growth, and although analysts remain optimistic about the company’s prospects, Nvidia’s stock seems to be trading at a nearly unjustifiable level.”


Courtesy: TheStreet