Following Nvidia (NVDA -0.02%) In a presentation at CES 2025, Bank of America analyst Vivek Arya reiterated his bullish view on NVIDIA’s growth trajectory and stock price upside potential.
Aria’s $190 price target implies an upside of 35% over the next year or so, while the stock has enjoyed an impressive rise over the past few years. Let’s see if that estimate is reasonable based on Nvidia’s growth and valuation.
Should you buy the stock?
Nvidia is currently benefiting from two major trends. One is the shift from general-purpose computing to accelerated computing, which is driving strong demand for Nvidia’s graphics processing units (GPUs). Another opportunity is the growing adoption of artificial intelligence (AI) solutions, with Nvidia developing computing platforms that enable everything from humanoid robotics to autonomous mobility. Consistent with these trends, Nvidia has been growing its business at a very high pace in recent years.
But the AI chip leader won’t continue to grow its annual revenue at the triple-digit pace it has in past years. The company’s sales rose 94% in the most recent quarter, down from 122% in the previous quarter, and Wall Street consensus is that sales and earnings per share will rise by about 50% in fiscal 2026, which ends in January. is expected to increase.
Assuming the stock continues to trade at the same forward price-to-earnings ratio of 47x, the stock could rise above $200 in the next 12 months, based on fiscal 2026 earnings estimates of $4.43. You’re probably hoping that Nvidia hits similar earnings targets and trades close to its current P/E ratio.
However, slowing growth could reduce the valuation multiples investors pay. If Nvidia were to trade at 35 times next year’s expected earnings, the stock would be trading at $155 this time next year, which isn’t much higher than the current share price of $140. Either way, investors should lower their expectations for Nvidia’s profits this year.
Bank of America is an advertising partner of Motley Fool Money. John Ballard has a position at Nvidia. The Motley Fool has a position in Bank of America and Nvidia and recommends Bank of America and Nvidia. The Motley Fool has a disclosure policy.
