Analysts rework Nvidia stock price targets on AI dominance

view original post

How many times in your life have you heard the about a “once-in-a-lifetime opportunity”?

Probably a lot more than once, given the way people are trying to sell you something every time you look at the TV, pick up your phone or sit down to watch all those cat videos on YouTube.

Whether it’s cars, real estate or Beanie Babies, somebody somewhere is telling you’ve got to buy whatever they’re selling right here and now or forever hold your peace.

AI-chip making kingpin Nvidia (NVDA) has been stirring up a similar kind of excitement.

Shares of the Santa Clara, Calif., tech giant, which is scheduled to report earnings on Nov. 20, have nearly tripled both year-to-date and from a year ago.

💰💸 Don’t miss the move: SIGN UP for TheStreet’s FREE Daily newsletter 💰💸

Founder and Chief Executive Jensen Huang surprised a good portion of the internet recently when he said he doesn’t wear a watch “because now is the most important time.”

Nvidia CEO Jensen Huang is riding a wave of AI demand.

Slaven Vlasic/Getty Images

Nvidia CEO says he’s not ambitious

“I’m not at all ambitious,” Huang said in the video. “I don’t aspire to do more. I aspire to do better at what I’m currently doing. I’m not reaching for more; I’m waiting for the world to come to me.”

And the world is indeed coming to him and his company, where, Huang said, “our definition of a long-term plan is what are we doing today.”

Given Nvidia’s achievements, it’s hardly surprising that Melius Research analyst Ben Reitzes called the company’s stock a “once-in-a-lifetime opportunity.”

The analyst boosted the firm’s price target on Nvidia to $185 from $165 and affirmed a buy rating on the shares, according to The Fly.

Reitzes, who cited higher earnings estimates for the price-target increase, said he had “higher conviction in our long-term estimates for Nvidia vs. any other [semiconductors]/systems company we cover.”

He added that giving up on Nvidia here after its hit Hopper graphics processing unit microarchitecture would be “like giving up on Apple at iPhone 1 or 2.”

The analyst added that “while it didn’t seem possible, we are even more excited about Jensen Huang’s next chip than we were before.

“It’s similar to the feeling around product cycles with Apple’s iPhone some 15 years ago, just on a different scale,” he said.

A journalist weighs in on Nvidia potential

Reitzes isn’t the only one making the Apple (AAPL) comparisons. Forbes contributor Tim Bajarin wrote in a Nov. 12 article that Huang shares many of the qualities of Apple’s co-founder, Steve Jobs.

“To be clear, there will be only one Steve Jobs,” he wrote. “Nobody can come close to his genius and visionary success.”

“However, Jensen Huang … has the same caliber of vision and energy to drive Nvidia to be like Apple, a multitrillion-dollar company that is leading the charge in the world of high-performance computing and AI servers.”

Bajarin said that even though Huang sounded like a broken record to some analysts, “the more we looked into his vision, we could see he was on to something big, even if we did not know what that would be.”

“This connection I am making is a result of knowing each of them, hearing their visions, and seeing those visions become a reality,” he said. “It is not much of a stretch to suggest that, at least up to now, Jensen Huang is as close as we will get in tech to Steve Jobs.”

Of course, like any other company in the top spot, Nvidia is facing competition.

Analyst sees another good NVDA quarter

E-commerce and entertainment giant Amazon (AMZN) is set to release its newest artificial-intelligence chips as the e-retail and tech giant seeks returns on its multibillion-dollar semiconductor investments and reduces its reliance on Nvidia, the Financial Times reported.

Executives at Amazon’s cloud-computing division are spending a lot on custom chips, hoping to boost efficiency insides its data centers and bring down the costs of Amazon Web Services to customers, the publication reported.

More AI Stocks:

Separately, AWS is reportedly in talks for a potential deal valued at roughly $475 million over five years to give IBM (IBM) access to Nvidia GPUs through its cloud service, Business Insider reported, citing an internal Amazon document.

Under such a deal, IBM would use AWS EC2 servers that come equipped with Nvidia’s AI chips. One person familiar with the document and the negotiations said the IBM deal was for AI training and the talks are ongoing.

Investment firms issued research reports ahead of Nvidia’s quarterly results.

Morgan Stanley raised the firm’s price target on Nvidia to $160 from $150 and maintained an overweight rating on the shares.

The investment firm expects “another very good quarter.” But it says the bigger upward revisions happen later in the year as the current environment is supply-constrained for Nvidia’s Blackwell chips, and also partly for H200, a graphics-processing unit designed for high-performance computing and generative AI workloads.

Piper Sandler analyst Harsh Kumar raised the firm’s price target on Nvidia to $175 from $140 and reiterated an overweight rating on the shares.

The analyst also elevated Nvidia to its top large-cap pick given the company’s “dominant positioning” in artificial-intelligence accelerators and the upcoming launch of the Blackwell architecture.

The total addressable market for AI accelerators will to rise in 2025 by $70 billion, and Nvidia is well positioned to capture most of the incremental market increase while ceding only a small bit to its merchant chip competitors, Kumar said.

Regarding Nvidia’s third-quarter report, the analyst’s bull case projects a beat of roughly $1.3 billion in revenue for the October quarter and a beat of around $1.5 billion in a “greatly supply-constrained” January quarter.

Management is likely to make comments about extremely strong demand for H200 as well as both Blackwell and the Grace Blackwell superchip, Kumar said.