Nvidia Stock Gets a 49% Price Target Boost. Why Analysts Are So Bullish.

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Analysts are bullish on Nvidia stock.


Justin Sullivan/Getty Images

Analysts are bullish on

Nvidia

heading into the company’s third-quarter earnings next week, with demand from data centers, artificial intelligence and gaming set to boost the stock.

Nvidia (ticker: NVDA) was rising Thursday, up 1.8% to $299.97. The shares have risen around 120% over the past year, with the company recently pushing past Warren Buffett’s

Berkshire Hathaway

(BRK.A and BRK.B) as the seventh most valuable American company by market capitalization. The stock closed at $294.59 on Wednesday.

Based in Santa Clara, California, Nvidia is primarily a maker of graphics processing units (GPUs). These computer chips were originally designed for use in the likes of gaming and film, but are increasingly used in high-performance computing applications such as running data centers and operating artificial intelligence (AI).

Nvidia is set to report quarterly earnings next Wednesday—and there are reasons to be bullish ahead of that, according to analysts at Oppenheimer and Susquehanna.

Analysts led by Rick Schafer at Oppenheimer reiterated their Outperform rating on Nvidia stock and raised their target price on the shares by 49% to $350 from $235.

The team at Oppenheimer sees upside to consensus expectations for sales and earnings both in the last quarter and the current quarter, largely led by data centers and AI, as well as gaming.

“Supply constraints continue to weigh on the group, though we see Nvidia, a top semi-supplier, as better positioned to secure capacity,” they noted.

The analysts don’t view the earnings release itself as a likely material catalyst in the near term and said they remain long-term buyers. “Nvidia remains the industry leader in high-performance gaming and is ideally positioned for sustained structural growth led by data center/AI,” they said.

Meanwhile, Christopher Rolland at Susquehanna reiterated his Positive rating on Nvidia stock and hiked his target price to $360 from $250.

Rolland said GPU demand and share gains should drive another earnings beat and guidance raise, though he noted that sentiment already was elevated going into earnings.

“Overall, we expect strong results and guide from Nvidia but note signs of a potential deceleration vs. the white-hot results of late,” Rolland said. 

Having noted that supply constraints remain top of mind, the analyst said that Nvidia’s manufacturing strategy involving both

Taiwan Semiconductor Manufacturing

(TSM) and

Samsung

(SSNLF) “serves as a distinct advantage” in the time of an industry-wide pinch on supply. He expects Nvidia to secure enough supplies to sustain growth throughout this year.

“Nvidia one of the fastest-growing companies in many key growth areas such as Cloud, Autonomous Vehicle and Metaverse, and we deem it warrants a higher multiple than the rest of the peers,” Rolland added.

Shares in Nvidia have already been on a run higher this week, up more than 8% in the last five days, as it has firmed up its competitive push into the metaverse, launching platforms, software and computing tools to help enable the future of virtual worlds.

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