We’re now at the back end of earnings season but not all the big names have dialed in their latest financial statements yet. Once trading comes to a halt next Wednesday (August 23), 2023’s AI superstar Nvidia (NADAQ:NVDA) will step up to deliver its fiscal second-quarter of 2024 report.
The chip giant has been one of the biggest beneficiaries of 2023’s AI hype, but the huge share gains (up by 206% year-to-date) have not been built on hot air. The company stunned Wall Street when it released its F1Q report in May, with a guide that blew the estimates out of the water.
With the latest print fast approaching, is another exceptional beat-and-raise in the offing?
Most likely, says Baird analyst Tristan Gerra, who anticipates “another supercycle” for Nvidia. “We expect AI to fuel significant F2Q revenue upside along with continued growth momentum for 2H and well into 2024,” said the 5-star analyst. “Our channel checks suggest no competition in AI enterprise for the medium term. Grace represents an incremental few billion revenue opportunity for the medium term, in our view, cannibalistic to x86, as Nvidia’s value proposition is to densify servers, optimizing power, versus more server units. We see also nascent demand for GPU-based edge AI use cases.”
As Gerra mentions above, the focus revolves around Nvidia’s dominance in the AI market, supported by the analyst’s industry assessments that indicate a surge in demand across various sectors: from individuals to enterprises and hyperscalers. Drawing from these assessments, Gerra thinks AI will push Nvidia’s DC revenue growth “well over” 50% in F2025/C2024.
And it’s not only big enterprises that are getting in on the AI game. Gerra points out an “emerging demand” for consumer GPUs being used for AI purposes. These are getting used for local small training and inferencing applications, with the analyst noting that local AI is beneficial as it reduces security risks and latency.
So, what does this all mean for investors? Gerra maintained an Outperform (i.e., Buy) rating on NVDA, while boosting his price target to $570 from the prior $475. The new figure makes room for gains of 27.5% from current levels. (To watch Gerra’s track record, click here)
Looking at the consensus breakdown, other analysts have also been impressed. Based on 30 Buys and 2 Holds, the word on the Street is that NVDA is a Strong Buy. At $513.50, the average price target implies ~15% upside potential from current levels. (See Nvidia stock forecast)
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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.
