Nvidia’s Stock Expected to Thrive Despite High Hurdles

Analysts are expressing confidence in Nvidia Corp.’s stock, anticipating its continued success despite challenges ahead. Raymond James analyst Srini Pajjuri believes that even without surpassing last quarter’s impressive performance, a more modest beat and talk of visibility extending into 2024 will keep the stock on an upward trajectory. Pajjuri raised his price target on Nvidia’s stock from $450 to $500, maintaining a strong buy rating.

According to Pajjuri, the demand for graphics processing units (GPUs) is surpassing supply due to the boom in artificial intelligence (AI) spending, despite mixed trends in cloud capital expenditure. Nvidia will release its results for the July quarter on August 23.

Piper Sandler analyst Harsh Kumar shares a similar sentiment. He adjusted his price target accordingly, expecting positive results for the latest quarter and an even better forecast than anticipated. Kumar predicts $9.5 billion in data-center revenues for the October quarter guidance, building on the strong performance driven by the data center segment in the previous quarter. He also projects that Nvidia will end fiscal year 2024 with approximately $32 billion in data center revenues, with further growth expected in fiscal year 2025 due to the continuous adoption of accelerated data centers and Nvidia’s leading market share in AI applications.

Nvidia’s Potential Demand Boost in China

A recent report suggests that Nvidia, a leading technology company, could experience a surge in demand in China. This is due to the anticipated additional export constraints imposed by the U.S. government. Kumar, an expert in the field, has given Nvidia shares an overweight rating, further emphasizing the company’s potential.

Renowned analyst Tim Long from Barclays also praises Nvidia, stating that it is “the best of the AI names” and his top choice. He explains that Nvidia has managed to monopolize the economic benefits of the AI boom, with no significant competitors in sight. Long maintains his optimistic outlook on the stock, reiterating his price target of $600 and his overweight recommendation. He highlights that enterprise spending has weakened, diverting cloud capital expenditure budgets towards AI.

While acknowledging the high expectations surrounding Nvidia, Long and his team struggle to imagine a scenario where the stock does not perform well, especially considering the strong retail support it enjoys.

Nvidia shares have seen remarkable growth this year, more than tripling in value. This positive performance has garnered attention from analysts at Morgan Stanley, UBS, and Wells Fargo, who also believe in the company’s earnings potential.

Despite a slight decline in the chip sector, Nvidia remains resilient. Its stock is up 0.6% in morning trading while its rival, Advanced Micro Devices Inc., has experienced a decline of nearly 3%.

Read: Nvidia faces a high bar, but it’s ‘hard to bet against’ the chip stock, analysts say.

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