A Wall Street firm significantly raised its price target for Nvidia stock.
Nvidia (NVDA 0.80%) 2024 is a great year for the stock market, with an increase of nearly 180% as of this writing. This comes as the company has recorded solid growth in recent quarters due to strong demand for graphics cards deployed in artificial intelligence (AI) servers.
The company’s median 12-month price target of $150, according to the 64 analysts covering Nvidia, suggests only a 9% upside from current levels, suggesting there isn’t much upside. . However, Bank of America recently raised its price target for Nvidia from $165 to $190, which would represent a 38% upside from current levels.
Let’s take a look at why this is so and see if this fast-rising semiconductor stock has outperformed consensus estimates and has the potential to deliver even bigger gains going forward.
Strong market share and next-generation processors are a tailwind for Nvidia
Analysts at Bank of America raised their price target for Nvidia, citing the company’s dominant position in the AI chip market. They believe the chipmaker could continue to control an estimated 80% to 85% share of the space, which puts it in a prime position to take advantage of the $400 billion market opportunity. Become.
Bank of America’s bullishness is driven by the arrival of NVIDIA’s new generation of Blackwell processors, an impressive earnings report from major supplier TSMC, and Nvidia CEO Jensen’s statement that future demand for Blackwell cards is “insane.”・There is also a claim by Mr. Hwang. It’s worth noting that Nvidia management noted during the company’s August earnings call that it plans to sell billions of dollars worth of Blackwell processors in the fourth quarter of this year.
More importantly, demand for Blackwell chips is expected to outstrip supply in 2025. This is not surprising, as multiple cloud computing giants plan to deploy Nvidia’s Blackwell processors. In March of this year, Nvidia management noted that Amazon Web Services, Dell Technologies, Google, Meta, Microsoft, OpenAI, Oracle, Tesla, and xAI are among the many companies expected to adopt the Blackwell platform .
This is not surprising considering that Nvidia’s Blackwell platform is expected to offer significant performance improvements compared to previous generation Hopper chips. More specifically, Nvidia promises 4x better AI training performance and 30x better AI inference compared to Hopper. Even better, NVIDIA claims Blackwell can train large-scale language models (LLMs) at “up to 25x less cost and energy consumption than previous generations.”
Additionally, NVIDIA plans to extend its technological lead in the AI chip market with the arrival of Blackwell. That’s why it’s no surprise that the company maintains a high share of the AI chip market, as Bank of America analysts predict. This should ideally pave the way for a long period of solid growth for Nvidia.
Higher-than-expected growth suggests further upside
Bank of America predicts that the AI accelerator market will grow to $280 billion in 2027 and could exceed $400 billion in the long term. Nvidia is generating about $49 billion in revenue from its data center business this year. Of this, $42 billion came from sales of computing chips such as AI graphics cards, and the rest came from sales of networking solutions.
At this pace, Nvidia could end fiscal year 2025 (ending in January 2025) with $84 billion in revenue from sales of AI accelerators. Assuming Nvidia controls even 75% of the AI accelerator market in 2027 (coinciding with 2028), it could generate $210 billion in revenue from this space (BofA’s $280 billion market size estimate (based on). That’s a big jump from the AI accelerator revenue Nvidia is expected to report this year.
Considering the potential revenue Nvidia could generate from selling AI networking chips over the next five years, there’s a good chance the company’s sales will exceed analysts’ expectations.
NVDA earnings forecast data for the current year by YCharts.
At the same time, the $400 billion long-term revenue opportunity in AI chips suggests that Nvidia may have even more room to grow AI revenue in the future. All of this explains why analysts expect Nvidia’s revenue to grow at an impressive 57% annual rate over the next five years. The market will likely reward such solid earnings growth, leading to further stock price appreciation in both the short and long term.
As such, this AI stock appears well-positioned to approach Bank of America’s latest price target before moving higher in the future. That’s why investors looking to add AI stocks to their portfolios might want to buy Nvidia. That’s because Nvidia currently trades at an attractive 35 times forward earnings. That’s because it’s not that expensive considering the expected earnings of the Nasdaq 100 index. A multiple of 30 (using the index as a proxy for tech stocks).
Bank of America is an advertising partner of The Motley Fool’s Ascent. John Mackey, former CEO of Amazon subsidiary Whole Foods Market, is a member of the Motley Fool’s board of directors. Randi Zuckerberg is a former head of market development and spokesperson at Facebook, sister of Meta Platforms CEO Mark Zuckerberg, and a member of the Motley Fool’s board of directors. Harsh Chauhan has no position in any stocks mentioned. The Motley Fool has positions in and recommends Amazon, Bank of America, Meta Platforms, Microsoft, Nvidia, Oracle, Taiwan Semiconductor Manufacturing, and Tesla. The Motley Fool recommends the following options: A long January 2026 $395 call on Microsoft and a short January 2026 $405 call on Microsoft. The Motley Fool has a disclosure policy.
