On Thursday, BofA Securities increased its price target on shares of NVIDIA (NASDAQ:NVDA) to $1,320 from the previous $1,100, while reaffirming a Buy rating on the stock. The firm's analyst highlighted NVIDIA's leading position in the AI accelerator market, which is expected to grow significantly in the coming years.
The analyst praised NVIDIA's "unparalleled combination" of turnkey system design, wide customer base across various verticals, and consistent execution of product roadmaps. These factors contribute to NVIDIA's ability to maintain over 80% market share in the AI accelerator space, which could see its value double to around $100 billion in the calendar year 2024 and potentially reach over $300 billion by 2030.
NVIDIA's upcoming next-generation Blackwell product and the growth of its networking solutions, such as Spectrum-X, are anticipated to contribute to the company's continued success. The ramp-up of Spectrum-X is expected to generate multi-billion dollars within a year. The demand for NVIDIA's products is outstripping supply, a trend that may continue through most of the calendar year 2025, according to the company.
The firm has significantly raised its projected earnings per share (EPS) for NVIDIA by 12%, 21%, and 21% for fiscal years 2025, 2026, and 2027, respectively. These adjustments reflect the calendar years 2024, 2025, and 2026. The new EPS forecasts are $25.76, $35.90, and $44.37, respectively.
Rapid adoption of the Blackwell product could result in an EPS exceeding $50 within two years, suggesting that the stock is trading at a reasonable price-to-earnings (PE) ratio of around 20 times.
The price objective has been raised to $1,320 based on a constant 37 times PE multiple of the estimated earnings for the calendar year 2025, which aligns with NVIDIA's historical median PE multiple. This adjustment reflects the firm's confidence in NVIDIA's growth trajectory and market position.
InvestingPro Insights
As NVIDIA (NASDAQ:NVDA) continues to capture the attention of analysts and investors alike, real-time data from InvestingPro provides further insights into the company's financial health and market performance. With a robust market cap of $2340.0B USD, NVIDIA stands as a titan in the tech industry. The company boasts an impressive revenue growth, with the last twelve months as of Q4 2024 showing a staggering 125.85% increase, outpacing many competitors in the semiconductor space. This growth is not only impressive in its magnitude but also in its consistency, with quarterly revenue growth reaching an extraordinary 265.28% for Q4 2024.
InvestingPro Tips highlight NVIDIA's position as a prominent player in the Semiconductors & Semiconductor Equipment industry, supported by strong returns over various time frames, including the last month, three months, and year. Particularly noteworthy is the high return of 209.5% over the past year, reflecting the company's strong market performance and investor confidence. Additionally, NVIDIA's stock is trading at a high earnings multiple, which aligns with the company's significant growth expectations. Investors can further explore these metrics and gain more insights by visiting InvestingPro's dedicated page for NVIDIA at https://www.investing.com/pro/NVDA.
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