NVIDIA's stock predicted to surge by more than 20% according to analyst estimate
In the dynamic world of technology, Nvidia (WKN: 918422) continues to stand out as a significant player in the Artificial Intelligence (AI) market. The company, known for supplying the necessary infrastructure such as chips, is forecasted to see impressive growth in the coming years.
Analysts at HSBC are particularly bullish, setting a price target of 200 US dollars for Nvidia, implying an upside potential of over 40%. This optimistic outlook is primarily driven by the ongoing dynamic in the AI chip market amid U.S.-China trade tensions. These tensions have led to new U.S. export restrictions on advanced AI chips to China, causing revenue pressures for some companies but simultaneously creating a significant opportunity for U.S.-based AI firms like Nvidia to fill this market gap.
One top analyst, Timm Schulze-Melander of Redburn Atlantic, sees potential for over 20% upside in the Nvidia stock. Schulze-Melander identifies two primary growth drivers for Nvidia that the market may be underestimating. The first is the use of accelerated computing or parallel processing with graphics processors (GPUs) to reduce computing costs. The second is the potential demand from companies, governments, and GPU-specialized cloud service providers that the market may be underestimating.
For the latest quarter, analysts expect an average revenue increase of 80% and earnings per share to rise by 97% year-over-year to $0.74. For the full year, experts predict a revenue increase of 100% and earnings per share of $2.86, up 137%. Schulze-Melander forecasts an average annual growth rate of earnings per share of 38% for Nvidia. The analyst's price target for Nvidia is 178 US dollars, implying an upside potential of currently 27%.
However, concerns have been raised about the sustainability of the AI market and Nvidia's position, following the stock's excellent performance. Hyperscalers, large cloud providers like Microsoft, are trying to limit Nvidia's dominance, but this may not have a significant impact on the company's growth prospects. Recently, Nvidia faced criticism due to reports of overheating issues with its new product, Blackwell. The company has reportedly reassured investors and customers that the first draft of a new hardware platform always requires several iterations.
In summary, the key reasons behind the predicted upside include geopolitical factors, market opportunity, and Nvidia's positioning in the AI sector. These factors underpin the bullish outlook on Nvidia's stock, as the company is well-positioned to benefit from increased demand domestically and from other international clients. Nvidia will present the numbers for the latest quarter on Wednesday.
In the context of ongoing geopolitical tensions and the rising demand for AI technology, the analysts at Redburn Atlantic predict an upside potential of over 20% for Nvidia's stock, primarily driven by the company's innovative use of parallel processing with graphics processors and potential demand from various sectors such as companies, governments, and cloud service providers. Furthermore, the analyst Timm Schulze-Melander foresees an average annual growth rate of earnings per share of 38% for Nvidia, underscoring the company's robust financial growth in the investing realm, particularly in the AI sector.
