Shares of Nvidia (NASDAQ:NVDA), the world's leading AI chipmaker, saw an uptick in early Monday trading after Goldman Sachs added the company to its 'Americas Conviction List'. The bank's analysts upgraded Nvidia's status from a 'Buy' rating assigned in late August while maintaining a price target of $605 per share.
Goldman Sachs anticipates Nvidia to uphold its market-leading position, citing the chipmaker's competitive edge and the growing complexity of customer-developed AI models as key factors. The bank also noted that supply constraints are beginning to ease and expects the robustness in Nvidia's data center business to persist.
InvestingPro's real-time metrics for Nvidia show a strong financial performance with a market cap of $1070000.0 million and a revenue of $32.68 billion. The company's P/E ratio stands at 104.99, reflecting a high earnings multiple, which is one of the InvestingPro Tips for Nvidia. The company's robust financial health is also indicated by its gross profit margin of 64.62% and an operating income of $10.8 billion.
In a recent collaboration with Google (NASDAQ:GOOGL) Cloud, Nvidia CEO Jensen Huang expressed optimism about the future of AI computing. “We're at an inflection point where accelerated computing and generative AI have come together to speed innovation at an unprecedented pace,” said Huang. This partnership aims to facilitate clients running AI applications on Google Cloud using Nvidia-made chips, further deepening hardware and software integration.
Nvidia shares were marked 1.44% higher in premarket trading, indicating an opening bell price of $441.34 each. The stock has shown significant growth this year, with an increase of over 203%, reaching an all-time high of $487.84 on August 29. This aligns with the InvestingPro Tip that Nvidia has seen a large price uptick over the last six months.
Alongside Nvidia, Goldman Sachs also added cybersecurity group Okta (NASDAQ:OKTA) and industrial supply group Cintas (NASDAQ:CTAS) to its 'conviction buy' list. The bank sees Okta as another potential AI beneficiary and expects accelerated backlog and recurring revenue as customer demand picks up. Okta has a price target of $100, suggesting a potential rise of roughly 22.7% from Friday's close.
For Cintas, Goldman Sachs believes the company's organic growth has structurally reset higher than pre-COVID levels, driven by volumes and growing opportunities in delivering uniforms into the healthcare vertical. The stock has a price target of $592, indicating more than 23% upside. Cintas was also upgraded by Bank of America in mid-September, citing it as a beneficiary of diminishing recessionary risks.
In contrast, Salesforce (NYSE:CRM) and Johnson Controls (NYSE:JCI) were removed from Goldman Sachs' list.
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