The remarkable surge in Nvidia (NASDAQ: NVDA) shares this year, with the stock’s value nearly tripling, has placed the chip giant amongst an elite group of companies whose market cap exceeds $1 trillion.
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Interestingly, the $1 trillion number also shows up in Tigress Financial analyst Ivan Feinseth’s latest note, and it’s not in a “Is the stock overvalued now?” kind of way.
“NVDA will be a major beneficiary of the expected $1 trillion worth of global data infrastructure spending that will transition from general-purpose to accelerated computing as companies integrate generative AI into every product, service, and business process,” the 5-star analyst explained. “The strength of its AI capabilities will continue to drive massive revenue growth, and strong Q1 results and a massive increase in guidance highlight NVDA GPU and AI adoption.”
It is the combination of the opportunity in AI and forward guidance that blew Wall Street estimates out of the water, fueling the gains this year. So, with Nvidia, it’s less about hype than actual strong real-world performance. Moreover, considering the fact that all the major cloud-based server providers are consistently incorporating NVDA GPUs into their systems to enhance AI inference capabilities and expand generative AI services, the company remains the best player in generative AI.
However, the opportunity extends beyond just generative AI. While the Automotive segment currently generates far less revenue, it should be noted that sales increased by 114% year-over-year in FQ1, reaching a record $296 million. Furthermore, the Automotive pipeline has climbed to $14 billion for the next six years, compared to $11 billion in the same period a year ago.
Not to mention, there’s an enviable balance sheet, with $14.53 billion, $5.88 per share, in excess cash at the end of the April quarter. Along with Feinseth anticipating Economic Operating Cash Flow (EBITDAR) generation of $33.15 billion over the next twelve months, it will allow the company to “continue to drive growth and increasingly expand its product portfolio and capabilities through ongoing investment in R&D and strategic acquisitions.”
But is all this goodness already priced in? Not at all, according to Feinseth. In fact, along with reiterating a Buy rating, the analyst increases his price target from $320 to $560, making room for additional gains of ~33% over the coming year. (To watch Feinseth’s track record, click here)
Elsewhere on the Street, the stock garners an additional 29 Buys, 2 Holds and 1 Sell, for a Strong Buy consensus rating. Going by the $482.28 average price target, the shares will climb 14% higher in the months ahead. (See Nvidia stock forecast on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
