NVIDIA stock surged to a fresh 52-week high of $134.40 on Monday after Goldman Sachs analysts raised their price target to $165. The price target increase comes after a week of several other price target increases for NVIDIA stock after the company pleased Wall Street with its last earnings report.
NVIDIA stock price target to $165
Goldman Sachs analyst Toshiya Hari reiterated his Buy rating and raised his price target on NVIDIA stock from $130 to $165 in a note dated May 14. He feels the market doesn’t fully appreciate the chip maker’s long-term growth opportunities in datacenters. At the company’s Investor Day last week, he was surprised by the launch of NVIDIA’s next-gen chip called the Volta.
NVIDIA management told HPC Wire in an interview that the Volta is entirely different from their previous Paschal architecture. It’s 33% bigger than the Pascal P100 and will be the biggest GPU ever made. CUDA Software Principal Engineer Luke Durant describes the Volta as “a giant leap for machine learning.” The first Volta-based product, the Tesla V100 accelerator, was designed for datacenters, but the chip maker is expected to bring the new architecture to gaming, which is still its most important business.
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Hari was impressed by the chip maker’s push in the artificial intelligence and machine learning inference market. He was also surprised by NVIDIA’s total addressable market forecasts for 2020: $30 billion for HPC/ training/ inferencing.
Still bullish on NVIDIA stock
NVIDIA stock closed up 5.02% at $134.31 on Monday, but then its climb slowed on Tuesday. However, NVIDIA stock still managed to reach another 52-week high of $137.44 on Tuesday. The shares are up by more than 26% year to date and have been on a massive tear of more than 200% over the last 12 months. Despite this, Hari is still bullish on NVIDIA stock for a few reasons.
For example, he noted that the company is exposed to and positioned well in multiple growth markets, including PC gaming, virtual reality, self-driving cars, and datacenters, especially those with artificial intelligence and machine learning applications. He also sees “meaningful upside” to consensus estimates, as his fiscal 2018 earnings per share estimates for the chip maker are 19% above the Street, while his fiscal 2019 estimate is 55% higher than the consensus.
He feels that investors are still skeptical enough about NVIDIA stock for his call to work. He continues to take questions from investors “focused on near-term dynamics,” such as for the expected deceleration in the company’s gaming business in the second half of the year. He said investors also ask about the possibility of an “air-pocket” in datacenters, the chip maker’s lack of leverage in gross margins, and elevated inventory levels.