|Can Shares of Nvidia have more than doubled in the past seven months. Now one Wall Street analyst is making the case for why they could double again.The chip maker was up 2.3% to $152.50 early Thursday. Over the past year, it gained 230% , the most by far of any S&P 500 company. Now Citigroup analyst Atif Malik thinks the stock can go to $300.|
In a note to clients Thursday, he raised his price target on Nvidia’s stock from $145 to $180 — the highest of any of the 30-plus analysts surveyed by FactSet — and laid out the bull case for why the stock price could double.
The rise in Nvidia’s shares in recent years has come as its sales of chips for data centers, artificial intelligence, autonomous driving and gaming have grown. Nvidia was trading at about $20 two years ago and about $45 just one year ago before investors started flocking to the expanding graphics processing unit producer.
“Nvidia continues to transform itself from a PC to a diversified gaming, data center, and auto software platform and is benefiting from secular trends such as VR/AR, deep learning, AI, and autonomous driving,” Mr. Malik wrote.
Demand for chips in these areas is expected to remain hot with tech giants like Google-parent Alphabet Inc., Microsoft and Amazon.com spending billions on huge networks powered by artificial intelligence.
Nvidia is currently trading at about 47 times Wall Street’s projected earnings for the next 12 months. Analysts and investors, though, don’t seem ready to bail on the stock. More than half of the analysts surveyed by FactSet have had buy or overweight ratings since March on the company. The proportion of bullish analysts has increased gradually in the past two years, aside from a small dip earlier this year.
Mr. Malik notes that Nvidia is a leader in graphics processing units for deep learning.
He adds that one of its systems is used by more than 80 car makers, suppliers and research centers developing autonomous vehicles and that its GeForce brand is the most popular among PC gamers.
One of the only factors keeping Mr. Malik from posting an even higher price target than $180? The other semiconductor companies that are up more than 30% this year.
“Increasing competition from both semiconductor peers and cloud management platform providers internal AI chip efforts poses risk to NVDA’s outsized sales growth,” Mr. Malik wrote.
NVDA is an essential company, however these type of headlines is the type of thing that lets us know what kind of market environment we are in.