Nvidia’s (NVDA) planned acquisition of Arm appears to have hit a brick wall. Last September, Nvidia announced its intent to bring the U.K.-based chip designer under the fold in a deal expected to cost $40 billion, but it now looks like the deal’s consummation is in serious doubt.
This is the line of thought held by Rosenblatt Securities’ Hans Mosesmann, who thinks he might not be the only one expecting the deal to collapse.
“We now believe the move to acquire ARM later in the year is likely not going to happen as a result of the UK’s posture on the deal, which we think the Street has been slowly realizing,” the 5-star analyst recently said.
While this is a blow to Nvidia’s plans to expand its suite of offerings, it is not a deal breaker to Mosesmann, who reassures investors the “stock will work nonetheless, we believe.”
If fact, that appears a bit of an understatement, as at the same time as predicting the Arm deal’s demise, Mosesmann increased his price target for NVDA shares from $200 to $250, suggesting room for 23% upside over the next 12 months. The analyst’s rating remains a Buy. (To watch Mosesmann’s track record, click here)
The reason for the analyst’s bullish stance despite the Arm headwind is down to his belief Nvidia represents a “best-in-class AI play with growth vectors into next generation networking/DPU adoption.” The fact we are still in the early days of autonomous driving – another vertical for which Nvidia has a computing platform – is an additional tailwind.
Moreover, Mosesmann notes the alternative plan of action to a non-Arm deal still leaves the company well-positioned for long-term success.
“The new Grace semi-custom ARM CPU (supercomputing) and strategic engagements with ARM CPU players Amazon, Ampere, Marvell, and Mediatek cover a wide range of end-markets for Nvidia GPU to optimize its graphics offerings at scale,” the analyst confidently said.
Looking at the consensus breakdown, the rest of the Street also appears to think it would be foolish to bet against the chip giant. Of the 29 reviews on record, 1 says Hold while all the rest are positive, making for a Strong buy consensus rating. However, the stock is already up by 55% year-to-date, pushing the share price right up to the $204.42 average price target and leaving hardly any room to run for the foreseeable future. (See Nvidia stock analysis on TipRanks)
To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.
Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
