Shares of leading semiconductor stock NVIDIA Corp
The Nvidia Analyst: UBS analyst Timothy Arcuri has a Buy rating on Nvidia and raised the price target from $120 to $150.
The Analyst Takeaways: Supply checks point to strong demand for Nvidia Blackwell products, Arcuri said in the new investor note.
"We now believe EPS of ~$5 could be doable for CO25 as the order pipeline for NVL72/36 systems is materially larger than just two months ago," Arcuri said.
The analyst said the strong demand seen in supply checks comes as sentiment on Nvidia stock has faded in recent weeks.
Arcuri said the potential "wall of worry" on Nvidia stock could fade if the outlook materializes.
"We are even now still backing in a gap to what is being suggested by the supply check, far above sell side."
Enhanced power efficiency of the new products is among the reasons the analyst sees demand being higher than anticipated based on the new supply checks.
"Large-scale orders for NVL72/36 systems have not abated since our last major model in late April, further confirming the significant shift among hyperscale customers towards acquiring full-rack systems, which for NVDA will translate into a richer revenue mix than with Hopper."
The analyst raises the shipment estimate for NVL systems from around 52,000 to around 69,000 for 2025.
"We expect additional NVL orders to enter the pipeline during the back half of this year, in a similar vein to the buildup observed over the past couple of months."
Each additional 5,000 NVL shipments in calendar 2025 could add around $9 billion in revenue and around 20 cents in earnings per share, the analyst noted.
The new $150 price target is based on a price-to-earnings of 28x based on an estimated EPS of $5.25.
NVDA Price Action: Nvidia shares are up 2.24% to $128.65 on Monday versus a 52-week trading range of $39.23 to $140.76. Nvidia stock is up 154% year-to-date in 2024 and up over 200% over the last check.
