Source: Caixin.
Bank of America said that despite Nvidia's stock rising about 170% this year, its valuation is still attractive. Investors should consider any dip in Nvidia's stock price as a buying opportunity.
Since the beginning of this year, the stock price has surged by 171.5%, and this week it has once again topped the market cap list of US stocks. Although the stock experienced a significant pullback on Thursday, Bank of America believes that it still represents an attractive investment opportunity. Any dip in Nvidia's stock should be viewed as a chance to buy more.$NVIDIA (NVDA.US)$The stock price has risen 171.5%, and this week it has topped the market cap charts in the US stock market. Although the stock experienced a sharp decline on Thursday, Bank of America believes that it still represents an attractive investment opportunity - any downturn in Nvidia stocks should be viewed as an opportunity to buy more stocks.
The bank analyst Vivek Arya wrote in the latest report that investors should continue to be bullish on this chip manufacturer that drives the prosperity of artificial intelligence (AI) and listed five reasons as follows.
"NVIDIA's stock has risen sharply, up 50% in just the second quarter (compared to a 4.4% rise in the S&P 500 index), which may make it vulnerable to profit-taking in the short term. But we believe that any fluctuations could be short-lived," he wrote.
Coincidentally, after its consecutive days of gains, NVIDIA fell 3.54% on Thursday, giving up its position as the global market cap leader to Microsoft.
In this report, Arya reiterated his "buy" rating on NVIDIA stock with a target price of $150, which means there is about 15% upside potential for this stock.
The five bullish factors are as follows:
1. The hardware deployment cycle of Generative AI (GenAI) may be 3-5 years, but is currently only in its second year. NVIDIA has a $300 billion opportunity to leverage, which is roughly three times its expected revenue this year.
2. The advantage of NVIDIA's next-generation dedicated Blackwell AI accelerator system will begin later this year, with stable demand from cloud customers.
3. We believe that recurring software services can drive the next phase of growth while strengthening its direct relationship with enterprise customers.
4. Currently, the valuation of the stock corresponding to the market expectation for performance is 35-40 times. If optimistic scenario of earnings per share of $5, the P/E ratio is only around 30 times, which is very attractive . Arya pointed out that the company's current valuation is lower than it was last year.
5. Unlike the 'Internet boom' which relies on high-risk debt financing, generative AI deployment is a competition between some of the most well-capitalized (cloud) customers.
Among the five reasons for bullishness listed by Bank of America, some have also been recognized by other investment banks. On Tuesday, Rosenblatt Securities analyst Hans Mosesmann raised NVIDIA's target stock price to $200, citing the potential for significant recurring revenue from CUDA software products.
Editor/tolk