Nvidia’s stock surge could amount to $200 billion with ‘mammoth growth’ on tap
It’s a testament to Nvidia Corp.’s blockbuster run over the past year that Wall Street is, in a way, looking past eye-popping metrics like a quintupling of data-center revenue in the latest quarter.
But, indeed, investors have become so accustomed to that sort of performance from Nvidia
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that they’ve increasingly been wondering how long the company can keep growing. With that backdrop, one particular comment from management stood out to Bernstein analyst Stacy Rasgon.
“[O]ver the longer term the company not only sees accelerated compute ramping through the current $1 trillion of installed data-center infrastructure but also sees that installed base doubling to $2 trillion over the next five years,” Rasgon wrote in a note to clients.
That expansion of the installed base “feels almost scary but if true would suggest absolutely mammoth growth potential still to come,” he continued.
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In Rasgon’s view, Nvidia’s stock story “still feels like it has legs,” while the company’s opportunity in the data-center business “is enormous, and still early, with material upside still possible.”
He rates the stock at outperform and lifted his price target to $1,000 from $700.
Nvidia shares were up 13% in premarket trading Thursday. If those gains carried through to the regular session, they would drive a $215 billion boost to Nvidia’s market capitalization.
Adjectives were aplenty as analysts digested Nvidia’s report, with TD Cowen’s Matthew Ramsay calling out “seemingly insatiable demand for Nvidia-based AI solutions” that suggest a run rate upwards of $80 billion for Nvidia’s data-center business.
“We continue to believe the industry is in the early innings of two transformational paradigm shifts toward accelerated computing and generative AI — with Nvidia firmly positioned as the leader in both,” Ramsay wrote.
He was encouraged by management’s commentary that about 40% of data-center revenue came in support of inference applications. Inference in artificial intelligence is when models make predictions from data.
“That nearly half of Nvidia’s data-center revenues support inference workloads is yet another proof point that [large-language model] inference will be a major demand driver for Nvidia and others’ accelerators going forward,” he wrote.
Ramsay has an outperform rating on Nvidia shares and boosted his target price to $900 from $700 late Wednesday.
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Cantor Fitzgerald’s C.J. Muse cheered Nvidia’s “Goldilocks” messaging, as the company’s guidance was “just right” and offered “plenty of room for upside to estimates throughout the year.”
Nvidia’s expectation that demand will outstrip supply this calendar year implies the potential for sequential top-line growth for the duration of hte period. Meanwhile, he noted that executives “suggested expected shortages for new products launching, including H200, Spectrum-X, and B100, giving confidence that growth will continue well into [calendar 2025].”
Muse lifted his price target to $900 from $775 late Wednesday, with that new target “arguably conservative” and reflective of a 32-times multiple of his $28 estimate for adjusted earnings per share next calendar year.
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