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Bank of America analysts raised their price target for Nvidia stock to $190 per share this week.
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They see the AI market growing to $400 billion, giving Nvidia a “generational opportunity.”
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They point to Nvidia’s strong leadership among competitors, thanks to its corporate partnerships.
Bank of America analysts say Nvidia stock has been on a tear all year, but investors can brace for more gains ahead.
In a note on Thursday, analysts raised their price target on the stock from $165 to $190. That means a 38% upside from its price of about $138 per share at midday Friday.
Analysts point to explosive growth in the AI market in the coming years, which they say will give Nvidia a “generational opportunity” as the chip giant continues to consolidate its market leadership.
Analysts expect the AI accelerator market to grow to $280 billion by 2027, and to more than $400 billion over time – representing massive growth from $45 billion in 2023.
As AI models continue to grow rapidly — with developers like OpenAI, Google, and Meta releasing large new language models several times a year — analysts expect the need for computing to grow.
They add that each new LLM generation, especially those developed for larger size and better thinking abilities, will require greater training intensity.
“We continue to see an increase in the pace of new model development. LLMs in particular are being developed for larger size and better reasoning capabilities, both of which require greater training intensity,” the analysts said.
They also point to Nvidia’s strong partnerships with enterprise customers like Accenture, ServiceNow, Oracle and others, which demonstrate AI’s growing presence in larger companies and Nvidia’s role as a partner of choice.
“NVDA’s contributions span multiple verticals (e.g., Accenture, ServiceNow, Microsoft), and offerings like AI Foundry, AI Hubs, and NIMs are key tools for NVDA’s leadership in AI, not only on the hardware side but also on the systems/ecosystem side.” Analysts said.
Analysts also said Nvidia’s financials are well positioned for future gains. Given free cash flow generation at a margin of 45%-50%, which is nearly double that of other Magnificent 7 stocks, Nvidia will be able to generate $200 billion in free cash flow over the next two years, they wrote.
Nvidia shares have soared this year, rising 187% as artificial intelligence continues to boom year after year Short sales During the summer. The sector has since recovered, with chip stocks such as Nvidia and TSMC trading at or near all-time highs in recent weeks.
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