Goldman Sachs recently raised its 12-month price target for Nvidia Corp. from $750 to $800, representing an expected 21% gain based on expectations regarding data center revenue growth and AI monetization initiatives by the chipmaker.
Analyst Toshiya Hari maintains his buy rating on the stock, projecting significant non-GAAP earnings growth as well as steady expansion in Data Center services into 2025. His new price target anticipates these outcomes.
Optimism on AI
As artificial intelligence continues its surge, Goldman Sachs analysts are becoming more optimistic on chipmaker Nvidia Corp (NASDAQ:NVDA). On Monday, they increased their price target for Nvidia Corp to $800; representing a potential 21% upside from current levels. Analyst Toshiya Hari attributed this change to early evidence of AI monetisation from companies like Microsoft and Meta Platforms, along with positive earnings outlook from AI server maker Super Micro Computer.
Hari revised her forecasts for Nvidia’s Data Center segment upward to account for signs of robust demand for AI servers and an improvement in graphics processing unit (GPU) supply. She anticipates revenue growth to continue through 2025 due to investments by large cloud service providers and new product cycles.
Though certain risks remain, such as changing geopolitics and further export restrictions on GPUs, the analyst expects them to overcome successfully and thus includes it on her Conviction List with a Buy rating.
Valuation
Nvidia is well known for their GPUs (graphics processing units), used by gamers, artists and scientists. But increasingly seen as an outspoken advocate of artificial intelligence technology.
Recent results of the company have earned it praise from Wall Street, with Goldman analyst Toshiya Hari raising his price target from $625 to $800 based on Wall Street analysis, as well as increasing their buy rating to “conviction.”
Hari no longer assumes Nvidia’s data center business will experience decline during the second half of 2018; instead he projects steady expansion up until 2024. He points to signs that large cloud service providers may continue investing in AI hardware while noting they has several product cycles lined up.
Long-term investors must still be wary of short-term volatility; the stock has experienced two drawdowns of more than 80% since 1983 and investing experts recommend having a diversified portfolio to protect themselves from major losses.
Monetization
Nvidia’s stock price has seen unprecedented gains thanks to artificial intelligence; Goldman Sachs raised its price target for Nvidia from $650 to $800 – representing a potential 21% gain versus current levels – and also included it on their conviction list.
Nvidia’s business model centers around selling graphics processor units (GPUs). Gamers and design professionals alike rely on these GPUs to create immersive virtual worlds for work or play. Nvidia is slowly shifting toward creating more revenue via cloud computing platforms like DGX and AI enterprise software solutions such as their AI Enterprise Software product offerings.
Nvidia’s monetization strategy may allow shareholders to maximize the value of their equity holdings tax-advantageously. A charitable remainder trust or loan to leverage Nvidia shares can provide liquidity without incurring capital gains tax bill, however these strategies may not suit everyone; please consult your tax advisor prior to taking any steps.
Risk
Nvidia of Sunnyvale, California designs, develops and markets programmable graphics processors along with associated software for use in gaming consoles and data centers – their data center revenues increased 55% during Q3, while gaming revenues saw growth of 42%.
Analyst Toshiya Hari reiterated his Buy rating and added Nvidia to his Conviction List, raising his 12-month price target from $660 to $800 based on robust growth in AI server business and increased non-GAAP earnings projections from the investment bank.
Nvidia has found great success monetizing their GPU technology through GPU sales, as illustrated by these forecasts. Hari outlined how GPU markets are growing quickly across industries such as gaming, 5G communications, autonomous vehicles and artificial intelligence; their strong competitive moat should allow Nvidia to benefit from these trends for years.
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