Three quarters of analysts rate Nvidia Corp. stock as a buy, but they haven’t updated their price targets to reflect the big gains in the stock price since the company reported earnings.
But at least two raised their targets before the market opened on Wednesday. C.J. Muse of Cantor Fitzgerald is now the second most optimistic analyst on Nvidia’s stock (NVDA, 0.82%).
“We have never seen a more frantic pace of technological innovation and subsequent drop in the cost of compute as we are seeing today,” Muse wrote. “All of this is driven by [Nvidia] and its full-system approach.” He also raised his price target from $140 to $175.
Muse said that Nvidia’s competitors are “always playing catch-up,” and he thinks that the company’s “clear technological push at scale” will help the stock go up even more.
When he talked about Nvidia’s market opportunity, he used big words. He thinks it could grow from a share of data center spending to a share of all IT spending and then to a share of the gross domestic product. That’s because the business wants “AI to be everywhere.”
Muse also said that there are “many qualitative examples of AI implementations offering clear [profit-and-loss] benefits” to customers. However, he said that because AI-powered technology is so new, it’s not as easy to find quantitative examples.
In the meantime, Nvidia says that its software, full-system approach, quick product cycle, and performance give it advantages that strengthen its competitive moat, according to Muse.
This stock is both a “overweight” and a “top pick” for him.
Atif Malik of Citi Research raised his price target from $126 to $150 as well.
He’s excited about what “AI agents” could do in the future. He said these would be better than chatbots because they would be able to make choices and act on their own. “AI agents can prompt businesses to make big investments when they work at their best,” Malik wrote.
He thinks that this trend is important for Nvidia because it could lead to more spending on AI, especially in the inference domain, which accounts for about 40% of Nvidia’s cash-center sales.
Nvidia stock was slightly down in the morning trade on Wednesday after going up 6.8% on Tuesday.
