On Thursday, NVIDIA Corporation (NASDAQ:NVDA) had its price target increased from $925 to $1,000 by Melius, while the firm maintained a Buy rating on the stock. The adjustment reflects a positive stance on the company's revenue performance and future prospects, despite current supply and demand imbalances and a squeeze on gross margins.
According to the analyst, several key factors underpin the new price target. These include NVIDIA's robust revenue outlook, compelling management commentary on quarterly and yearly growth driven by new products, and the potential of emerging initiatives like software, networking, and DGX Cloud. The analyst highlighted that the AI sector and NVIDIA, as its leader, are poised for sustained growth.
NVIDIA's guidance for the first quarter of fiscal year 2025 (F1Q25) is set at $24.0 billion, which is a 9% increase quarter-over-quarter and significantly above the consensus estimate. This is despite the impact of new restrictions in China and other countries, which have seen a reduction in Data Center sales. The company's CEO, Jensen Huang, expressed confidence that Data Center revenue would rise in calendar year 2025 due to sovereign investments and other growth vectors.
Melius now forecasts NVIDIA's revenues for 1Q25 at $24.1 billion, marking a 235% year-over-year increase and a 9% rise from the previous quarter. The firm also anticipates a gross margin of 77.0% and earnings per share (EPS) of $5.44. For fiscal year 2025, the EPS estimate has been revised upward to $23.88, reflecting a 77% revenue growth to $107.9 billion. Data Center revenue estimates for FY25 have been adjusted to $92.8 billion, an increase of 95% from previous projections.
Looking further ahead, Melius expects NVIDIA to continue its growth trajectory in fiscal year 2026, with EPS estimated at $28.54 based on projected revenues of $129.3 billion, a 20% increase. The new price target of $1,000 is based on 30 times the firm's fiscal year 2027 EPS estimate of $33.30. The next significant update on NVIDIA's performance and demand for its products is anticipated at the GTC event scheduled for the week of March 18, 2024.
InvestingPro Insights
NVIDIA Corporation (NASDAQ:NVDA) is capturing the attention of investors and analysts alike, with a recent price target increase signaling strong confidence in the company's growth potential. Delving into the data provided by InvestingPro, we can glean further insights into NVIDIA's financial health and market position.
InvestingPro Data highlights NVIDIA's impressive revenue growth, with the last twelve months as of Q3 2024 showing a substantial 57.07% increase, reaching $44.87 billion USD. This growth is indicative of NVIDIA's expanding influence in the tech sector, particularly in areas like AI and data centers, which aligns with the analyst's positive outlook on the company's revenue performance.
The company's P/E Ratio stands at 87.03, which might seem high, but it's important to consider the context provided by the InvestingPro Tips. NVIDIA has a perfect Piotroski Score of 9, suggesting strong financial health, and analysts are anticipating sales growth in the current year. Moreover, 12 analysts have revised their earnings upwards for the upcoming period, underscoring the optimism surrounding NVIDIA's future earnings potential.
NVIDIA's market capitalization has reached an adjusted $1670.0 billion USD, reflecting its stature as a prominent player in the Semiconductors & Semiconductor Equipment industry. This market cap, in conjunction with the company's sustained revenue growth and anticipated net income increase, provides a compelling case for investors considering NVIDIA's stock.
For those looking to delve deeper into NVIDIA's financials and future outlook, InvestingPro offers additional tips that can provide a more nuanced understanding of the company's prospects. With a total of 24 InvestingPro Tips available, investors can access a wealth of information to guide their investment decisions.
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