Cit Research analyst, Atif Malik, has raised his price target on shares of Nvidia Corp. to $520 from $420, citing a bullish scenario that could potentially lead to a target of $600. According to Malik, the market for artificial intelligence (AI) accelerators is poised for explosive growth, and Nvidia is well-positioned to maintain its dominance in this space.
One of the key factors behind Nvidia’s advantage, as highlighted by Malik, is its superior AI performance compared to competitor Advanced Micro Devices Inc. (AMD). With its state-of-the-art graphics-processing units (GPUs), Nvidia is expected to capture around 90% of the AI accelerator market.
While Meta Platforms Inc.’s PyTorch 2.0 machine-learning framework shows promise in narrowing the gap between AMD’s software and Nvidia’s, Malik emphasizes that Nvidia’s extensive experience in GPU optimization through CUDA, its software framework, and cuDNN, a neural-network library, can potentially create a significant hurdle for competitors. Malik suggests that it may take multiple generations of competitor GPUs and software improvements to match Nvidia’s expertise.
In conclusion, with the market for AI accelerators set to skyrocket, Nvidia’s stronghold in this domain and its continuous drive for innovation position the company for remarkable growth and success in the coming years. Investors should keep a close eye on Nvidia as it demonstrates the potential for even more massive upside based on its current performance and market conditions.
Nvidia’s Potential for Growth in Data-Center Sales Remains Strong
While Nvidia shares have experienced a remarkable surge of over 200% this year, industry expert Malik continues to view them as an attractive investment. He emphasizes the “favorable risk-reward” balance offered by the company, citing its potential to drive year-over-year growth in data-center sales throughout the remainder of the year. Despite potential challenges such as the impact of China’s market conditions, macroeconomic effects on gaming demand, and increasing competition, Malik remains optimistic about Nvidia’s prospects.
Positive Outlook for Nvidia’s Stock
Malik’s base-case scenario, which includes a $520 price target, is based on a 35-times price-to-earnings ratio. His analysis assumes that the adoption of generative AI will lead to a doubling of AI workloads this year. Moreover, he anticipates a contraction in gross domestic product for 2023, followed by modest growth in 2024.
In his bull-case scenario, with a price target of $600, Malik envisions a 40-times price-to-earnings ratio. This optimistic projection assumes that sales will exceed expectations due to the growing popularity of generative AI. Additionally, he predicts that the gaming business will maintain its momentum in 2023 and 2024 without being significantly impacted by macroeconomic conditions.
Market Response
Nvidia’s stock showed a slight increase of 0.8% during Monday’s premarket trading session, following a closing price of $454.69 on Friday.
Conclusion
Expert analysis suggests that Nvidia is well-positioned to achieve further growth in data-center sales. With positive projections based on generative AI and carefully considered scenarios for different market conditions, it seems that Nvidia’s stock could continue its upward trajectory.
Read: Nvidia’s stock could fly to $550 amid ‘robust demand’ across the board in AI, analyst says