Shareholders of Nvidia Corporation (NASDAQ: NVDA) have a big fat smile on their faces so far this year – and a Bank of America analyst says that smile will only get brighter moving forward.
Nvidia stock will benefit from the AI mania
On Tuesday, Vivek Arya raised his price target on the semiconductor behemoth to $255, which represents about a 17% upside on its previous close.
The analyst recommends buying Nvidia stock primarily because he expects it to greatly benefit from the recent quickly developing momentum in artificial intelligence.
Nvidia’s full-stack of accelerated silicon/systems/software/developers positions it uniquely to lead the nascent generative artificial intelligence arms-race among global cloud and enterprise customers.
Arya does expect volatility in the near-term following a massive year-to-date rally but is convinced that the pullback, if it realizes, won’t last long.
Nvidia Corporation could grow at a 34% CAGR
Nvidia Corporation is scheduled to report its Q4 results next week. Consensus is for it to earn 48 cents a share this quarter – down significantly from $1.14 a share last year.
Still, Vivek Arya is convinced that the company will see a boost to the total addressable market (TAM) of its accelerator business over the next five years to $62 billion on the back of generative AI.
We have constructed a new model that predicts Nvidia’s sales/pf-EPS could grow at a 25% to 34% CAGR to >$14/sh by CY27E as adoption of generative AI quadruples the addressable oppty for AI accelerators.
Nvidia stock is currently up more than 50% versus the start of the year.
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