Bank of America analysts raised the firm's price target for NVIDIA (NASDAQ:NVDA) to $800 from $700 per share in a note Friday, reiterating its Buy rating and top pick designation on the stock, noting its "compelling valuation."
Analysts said, ahead of NVDA's earnings report on February 21, that they are looking for a notable but more measured 3% to 5% or $500 million to $1 billion upside to both the reported FQ4 and guided FQ1, mainly due to incremental supply gains offset by China restrictions and some transition effects prior to the B100 accelerator launch planned for the second half of 2024.
"While a 3-5% beat would pale vs. the 10%/22% beat/raise of prior quarters and perhaps disappoint some bulls, the more measured pace will also be seen as creating more fertile ground for continued growth in CY25 and beyond," analysts wrote.
The analysts also stated that artificial intelligence demand is in its infancy and is becoming essential to operations.
It's "early days," they said, but the "results from top US cloud customers suggest a solid motivation for spending in genAI."
"Enterprise genAI adoption has yet to kick off and become more material in CY25, with NVDA benefitting from its widespread availability on public clouds, and unique partnerships with ServiceNow, SAP, VMWare, Dell, HPE and others," analysts added.
BofA expects NVDA to maintain its dominance in AI inference as well. "We forecast the data center AI accelerator market to grow from $43bn in CY23 to over $160bn by CY27E, likely an even contribution from training/inference. We expect NVDA to hold 90% share in training and achieve >50% share in inference. Most of MSFT's AI success thus far has been in AI inference, likely largely on NVDA GPU," the bank explained.