Proactive Investors - Bank of America (NYSE:BAC) analysts have reiterated their ‘Buy’ rating on NVIDIA Corp (NASDAQ:NVDA, ETR:NVD) and awarded it a $1,500 price target as the chipmaker’s stock surged almost 5% to a new record high of about $1,222 on Wednesday afternoon.
Nvidia's market capitalization surged above $3 trillion for the first time and put it on track to overtake Apple (NASDAQ:AAPL) as the second-most valuable company listed in the US.
Nvidia shares have skyrocketed amid investor excitement about AI, adding about 215% in the past 12 months.
Following investor meetings with Nvidia executives including CFO Colette Kress in San Fransisco, Bank of America analysts wrote in a note on Wednesday that they see Nvidia as best positioned to enable the $3 trillion IT industry to deliver AI services.
“Despite claims by rivals, we see Nvidia with a multi-year lead in performance, pipeline, incumbency, scale and developer support,” they wrote.
They noted that Nvidia’s use of holistic data center visibility avoids double ordering.
“While supply constraints can often lead to double ordering, Nvidia suggested very thoughtful planning by its customers given the large capital expenditures required to deploy generative AI unlike smaller-scale traditional chip projects, extensive upfront work required to stand-up compute instances, and Nvidia’s multiple touch points in computing, networking, software, backed by hard purchase orders,” they wrote.
While its customer mix has moved slightly away from large cloud service providers, Nvidia is seeing strength at enterprise and recommender engines, the analysts wrote.
Further, the analysts highlighted Nvidia’s multi-generational execution roadmap.
They noted that about three architecture teams are working in parallel at Nvidia, with the first supporting the current product, the second working on next-generation, and the third being “visionaries” working with the supply chain and customers to figure out what else can be made possible.
“While peers are cutting or constraining operational expenses, Nvidia’s research and development investments are accelerating to over 40% year-over-year in calendar year 24 versus industry-leading 30% compound annual growth rate from calendar years 2018 to 2023, despite the incumbency,” they wrote.