Nvidia (Nasdaq: NVDA) It has been in scintillating form in the stock market in 2024, reaching gains of nearly 180% as of this writing. This is due to the strong growth recorded by the company in recent quarters due to strong demand for graphics cards deployed in artificial intelligence (AI) servers.
The stock’s average 12-month price target of $150 — according to 64 analysts covering Nvidia — suggests there’s not much upside in the offer as it indicates gains of only 9% from current levels. but, Bank of America It recently raised its price target on Nvidia from $165 to $190, which would translate to a 38% upside from current levels.
Let’s see why this was the case and check if this was high flying Semiconductor stocks It could rise above consensus estimates and post stronger gains in the future.
Bank of America analysts raised their price target for Nvidia due to the company’s dominant position in the artificial intelligence chip market. They believe the chipmaker could continue to capture an estimated 80% to 85% share of this space, putting the company in a great position to capitalize on a $400 billion market opportunity.
Bank of America’s upside also stems from the arrival of Nvidia’s new generation of Blackwell processors, as well as an impressive earnings report from the major supplier TSMC And Nvidia CEO Jensen Huang’s claim that demand for upcoming Blackwell cards is “insane.” It is worth noting that Nvidia’s management indicated the company’s decision in August Earnings conference call It is on track to sell Blackwell processors worth several billion dollars in the fourth quarter of the current fiscal year.
More importantly, demand for Blackwell chips is expected to be higher than supply in 2025. This would not be surprising given that several cloud computing giants are preparing to deploy Nvidia’s Blackwell processors. In March of this year, Nvidia management indicated this Amazon web services, Dell Technologies,google, dead, Microsoft,Open Eye, oracle, TeslaxAI is among many companies expected to adopt Blackwell’s platform.
This is not surprising given the huge jump in performance that Nvidia’s Blackwell platform is expected to deliver compared to the previous generation Hopper chips. More specifically, Nvidia promises a 4x increase in AI training performance and a 30x jump in AI inference compared to Hopper. Better yet, Nvidia claims that Blackwell can train large language models (LLMs) “at up to 25 times lower cost and power consumption than its predecessor.”
Furthermore, Nvidia is set to expand its technology leadership in the AI chipset market with the arrival of Blackwell. That’s why it wouldn’t be surprising to see the company maintain a strong share of the AI chip market as Bank of America analysts expect. This would ideally set the stage for strong long-term growth for Nvidia.
Bank of America expects the AI accelerator market to jump to $280 billion in 2027 before heading north to $400 billion in the long term. Nvidia generated nearly $49 billion in revenue from its data center business this year. Of that amount, $42 billion comes from sales of computer chips such as AI-based graphics cards, while the rest comes from sales of its networking solutions.
At this pace, Nvidia could end fiscal 2025 (which will end in January 2025) with $84 billion in revenue from sales of its AI accelerators. Assuming Nvidia controls even 75% of the AI accelerator market in 2027 (which will coincide with its fiscal year 2028), it could generate $210 billion in revenue from this space (based on Bank of America’s $280 billion market size estimate). That would be a huge jump from the AI accelerator revenue that Nvidia is set to report in the current fiscal year.
Add to that the potential revenue Nvidia could generate from sales of its AI networking chips over the next five years, and there’s a strong possibility that the company’s top line will exceed analysts’ expectations.
NVDA’s revenue estimates for the current fiscal year Data by YCharts.
Meanwhile, the $400 billion long-term revenue opportunity in AI chips suggests there may be more room for Nvidia to grow its AI revenue in the future. All of this explains why analysts expect Nvidia’s net profits to increase at an impressive annual rate of 57% over the next five years. The market could reward this strong earnings growth with further stock appreciation in the short and long term.
As such, this AI stock appears to be well-positioned to approach Bank of America’s updated price target before heading higher in the future. That’s why investors looking to add AI stocks to their portfolios are better off buying Nvidia as it trades at an attractive 35 times forward earnings right now, which isn’t that expensive considering that Nasdaq-100 The index has a forward earnings multiple of 30 (using the index as a proxy for technology stocks).
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Bank of America is an advertising partner of The Ascent, a Motley Fool company. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, former director of market development and spokeswoman for Facebook and sister of Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Harsh Chauhan He has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Bank of America, Meta Platforms, Microsoft, Nvidia, Oracle, Taiwan Semiconductor Manufacturing, and Tesla. The Motley Fool recommends the following options: long $395 January 2026 calls on Microsoft and short $405 January 2026 calls on Microsoft. The Motley Fool has Disclosure policy.
Nvidia stock could rise another 38%, according to the Wall Street firm Originally published by The Motley Fool