As a “generational opportunity” continues to play out, a BofA expert thinks that Nvidia Corp. shares could add another 40% or so to their already huge rise.
In a report released Thursday, Vivek Arya of BofA raised his price target on Nvidia shares NVDA by 0.99% to $190 from $165. If the target is met, the stock would have gone up 39% from Thursday’s close.
Arya’s top pick in the sector is Nvidia stock, which is slightly up on Friday morning.
Wall Street loves Nvidia stock, but Arya believes that investors don’t give the company enough credit for being able to grow free cash flow at a 45% to 50% profit. He said that was higher than the average of about 23% to 25% for the “Magnificent Seven” group of big tech companies.
Arya thinks that Nvidia could have more than $200 billion in free cash flow in the next two years, which would be “equal to [Apple’s] and give them room to grow.”
He is more and more sure of Nvidia’s situation because there is a “growing presence of [artificial intelligence] in enterprise,” which is where customers want to work with Nvidia. He also said that Nvidia has “engagements” with big companies like Microsoft Corp. MSFT 0.17% and ServiceNow Inc. NOW 0.53% that cover a wide range of fields. Nvidia not only leads in hardware, but it also has a lot of room to grow in systems.
Arya says that a number of “AI-related events” in the past few weeks have made him even more optimistic about Nvidia’s prospects. These include Taiwan Semiconductor Manufacturing Co.’s (TSM) -2.04% positive comments on AI that came with its earnings report earlier this week and Advanced Micro Devices Inc.’s (AMD) -0.09% AI event last week, which saw that company raise its view of the total market for AI accelerators.
Arya thinks that Nvidia can make a good impression with its networking stance. He is being cautious when he says that networking will only make up 14% of the data center mix in fiscal years 2026 and 2027. On the other hand, he is more optimistic and thinks that Nvidia can get back to its previous range of 15% to 20%.
He wrote that the mix could go up to 17–18% again if the company’s Spectrum switch “sped up ramp (transitions to 100,000+ clusters) and potential share gain in Ethernet.” He kept a buy rating on the stock.
As of right now, Nvidia shares are still below the $138.07 high set on Monday, but they’re on track to post their third straight day of gains.
