- HSBC analyst Frank Lee double-upgraded NVIDIA Corp (NASDAQ:NVDA) to Buy from Reduce and increased the price target to $355 from $175.
- Lee acknowledges that he underestimated NVIDIA’s potential to cash on AI opportunity and speeding ramp-up post Microsoft Corp‘s (NASDAQ:MSFT) ChatGPT launch.
- While the overall TAM of generative AI remains difficult to forecast, the analyst noted that NVDA has the highest potential leverage from a hardware perspective.
- The analyst now sees NVIDIA as a dominant player in the industry, with over 90% market share.
- The analyst expects AI opportunity to benefit NVIDIA, given the prices of its AI chips (GPUs) of $10,000 for the A100 and $20,000 for the H100 are over 10x-20x higher than the average gaming GPU price of $1,000. Hence, the analyst believes high ASP will aid in reaching their expected revenue growth.
- Lee increased the sales estimate for 2024 by 18% to $33.37 billion and 2025 by 20% to $43.14 billion. He also raised 2024 EPS estimate by 25% to $5.11 (12% above consensus) and 2025 by 33% to $7.10 (18% above consensus).
- Given the aggressive rollout of ChatGPT by Microsoft and other AI initiatives from U.S. and Chinese cloud service providers, the analyst projects additional revenue contribution from AI GPUs of $5.2 billion in 2024 and $11.1 billionn in 2025. This leads to the analysts’ overall datacentre revenue projection of $20.3 billion (vs consensus of $17.4 billion) and $26.1 billion (vs consensus of $22.4 billion).
- Also Read: Nvidia Stock Jumps On Double Upgrade And 100% Hike To Price Target
- Price Action: NVDA shares are trading higher by 3.11% at $278.42 on the last check Tuesday.
Morgan Stanley’s Top Fund Manager Says This Utility Stock Could Win Big From AI Demands
Aaron Dunn, who manages the Morgan Stanley U.S. Value Fund, has highlighted the growing power needs of AI as a potential investment opportunity in the utility sector.
