Nvidia’s Remarkable Rise: A Deep Dive into the Numbers

Over the past year, Nvidia’s stock has witnessed an extraordinary 214% surge, catching the attention of investors.

Currently, the stock is perched at an all-time high, reflecting its robust performance.

Toshiya Hari, a highly regarded analyst at Goldman Sachs, gives his take on the situation.

Hari’s bull/bear analysis indicates an “attractive risk/reward profile,” contrary to the expectations associated with such a high-flying stock.

Despite the soaring stock, Hari maintains a Buy rating on NVDA shares, signalling confidence in its future prospects.

Hari is not only optimistic but backs it up by raising the price target from $625 to $800, suggesting a further 15% climb from the current levels.

The crux of Hari’s optimism lies in the two letters: AI, recognizing Nvidia’s pivotal role in the artificial intelligence sector.

The tremendous strides made by Nvidia are attributed to the surging demand for its best-in-class AI chips, hinting at sustained growth.

Hari foresees ongoing growth through the first half of 2025, propelled by continued investments in Gen AI infrastructure.

Contrary to expectations, Hari doesn’t foresee a drop-off in Data Center revenue, expecting consistent growth through the first half of 2025.

Hari predicts a notable shift in wallet share within the Data Center segment from general-purpose computing (CPU) to accelerated computing (GPU).

Various indicators in the broader ecosystem point towards robust and consistent demand for accelerated computing.

Early signs of AI monetization are evident in companies like Microsoft and Meta, further fueling the demand for Nvidia’s AI capabilities.

Hyperscalers, key players in cloud computing, are observed ramping up AI-related capital spending, indicating a broader industry trend.

AMD’s Positive Revision: The positive revision in rival AMD’s 2024 Data Center GPU revenue outlook, from $2 billion+ to ~$3.5 billion, adds weight to the positive industry sentiment.

Despite ongoing discussions about the potential growth of the Data Center business beyond 2024, Hari expresses increasing confidence in its sustainability.

What does the broader market think? Well, it’s a mixed bag.

The stock holds a Strong Buy consensus rating based on 34 Buy recommendations versus 4 Holds, signalling overall positivity.

However, there’s a cautious tone among some analysts. The average price target of $682.76 suggests that many believe the stock has reached its near-term peak.

Analysts are divided on whether the stock will continue its upward trajectory or remain rangebound in the coming months.

The future trajectory of Nvidia’s stock is under scrutiny, with the market debating whether the current surge can be sustained or if a period of consolidation is on the horizon.

Investors are left with a dilemma – whether to ride the current wave of success or exercise caution amid concerns about the stock’s potential to sustain its rapid ascent.

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