Nvidia's stock is up 200% this year. Why analysts say it still screams 'buy.'
By Emily Bary
One analyst made Nvidia’s stock his new top large-cap chip pick, while another likened Nvidia’s position to Apple’s in the early days of the iPhone
Even with Nvidia Corp. shares up 200% this year, they continue to rack up big praise from analysts.
Melius Research analyst Ben Reitzes compared the company’s positioning to that of Apple Inc. (AAPL) in the early days of the iPhone.
“While it didn’t seem possible, we are even more excited about Jensen Huang’s next chip than we were before,” he wrote Monday morning. “It’s similar to the feeling around product cycles with Apple’s iPhone some 15 years ago, just on a different scale. So, while it sounds strange, giving up on Nvidia here after its hit – Hopper – is like giving up on Apple at iPhone 1 or 2.”
Nvidia’s (NVDA) new Blackwell chip “should help partners use less power and space – and be better ready to tackle a surge in inferencing (the computing process related to model usage),” he added. And big cloud companies have vowed to continue spending large sums on Nvidia’s graphics processing units.
Read: Nvidia slips a spot among top S&P 500 stocks this year. Here’s what overtook it.
Reitzes is excited about what’s ahead in artificial intelligence, and what that all means for Nvidia’s financials. “AI is still on the come with compute-intensive catalysts/use cases like text-to-video, autonomous agents, self-driving cars and visual intelligence in their infancy,” he noted. “Big clouds, sovereigns and large enterprises are still more likely to invest more in this ‘once-in-a-lifetime opportunity.'”
Such trends could help Nvidia top Wall Street expectations this year – and next year, once the company’s next chip, called Rubin, kicks in. Plus, Reitzes is feeling more optimistic about Nvidia’s ability to get its gross margins back up to a mid-70s level.
He boosted his price target to $185 from $165, noting that Nvidia’s price-to-earnings-to-growth ratio is about 0.8x, using his own estimates. That’s “lowest in the Mag 7 by a wide margin,” Reitzes wrote, referring to the Magnificent Seven grouping of large technology stocks.
“We have higher conviction in our longterm estimates for Nvidia vs. any other semis/systems company we cover,” he added, while maintaining his buy rating.
Meanwhile, Piper Sandler’s Harsh Kumar made Nvidia his new top large-cap semiconductor pick.
“Our viewpoint is rooted in the belief that the overall [total addressable market] for AI accelerators will continue to rise in 2025 by $70 billion, and we see [Nvidia] well positioned to capture most of the incremental TAM increase while ceding only a small bit to its merchant chip competitors,” Kumar wrote.
He’s upbeat about the potential for a considerable positive surprise on Blackwell sales. While Nvidia’s outlook called for several billion dollars worth of Blackwell revenue in the January quarter, the company “has historically surprised the Street on the upside during initial stages of product ramps.”
As such, although he and his team “are aware that supply is tight,” they think Nvidia could post $5 billion to $8 billion of Blackwell sales for the January quarter, with their own estimates “skewed to the upper end of the range.”
Kumar lifted his price target on Nvidia’s stock to $175 from $145 while sticking with an overweight rating.
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-Emily Bary
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11-11-24 0906ET
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