Wall Street analysts rerated Nvidia Corp
Rosenblatt analyst Hans Mosesmann maintained Nvidia with a Buy and a $220 price target.
CEO Jensen Huang and CFO Colette Kress held court with Wall Street yesterday at CES, as investors were still digesting Jensen's keynote in Las Vegas.
Mosesmann provided his key takeaways from the Financial Analyst Q&A. The AI movement is moving quickly to Agentic AI (use of iterative planning and reasoning to solve massively complex multi-tasks) from simplistic Gen AI solving a simple query.
The benefits include significant operational efficiencies and outcomes, but the issue is that it requires massive data.
The massive data requirements of Agentic AI and the need for better outcomes require three AI compute subsystems that are constantly in iterative mode: Training at scale, Digital tuning (simulation Omniverse and physical AI real-world interaction called Cosmos), and AI deployment or inference.
Agentic AI requires not just chip acceleration and CPU know-how but also systems, software, algorithms, and massive engineering resources. Hence, Jensen quipped that not many AI chip startups are doing well.
Jensen's vision is that the next wave of AI will require AI co-pilots, assistants, and at-scale complete AI factories (token generators). So, for every manufacturing automobile factory, there needs to be a complete AI factory in constant support.
Jensen sees a rough rule of thumb: for every 1 million vehicles, there needs to be at least $1 billion in AI data center support in a brand-new market, and significant investment is required.
The $1 trillion existing general-purpose data center footprint needs to accelerate in the next ~4 years. The urgency comes from the current CPU-centered footprint, which is economically unviable in AI workloads. Accelerated computing is margin accretive.
The price target reflects ~44 times the P/E multiple to Mosesmann's fiscal 2027 EPS.
JP Morgan analyst Harlan Sur reiterated an Overweight rating on Nvidia with a price target of $170.
Nvidia continues to execute across all segments, the analyst said. While the first half is typically seasonally weaker than the second, Sur expects solid demand in PC gaming to be a strong revenue driver for the company, offsetting PC OEM, which is in secular decline.
The analyst expects the data center segment to grow strongly as hyperscale customers continue to embrace GPU-accelerated deep learning for processing large data sets. Sur remains encouraged by strength in the automotive and enterprise segments.
Sur flagged key takeaways from a fireside chat with CFO Colette Kress. Nvidia expects strong spending momentum in the data center sector to continue into calendar 2025, driven by the Blackwell ramp and broad-based demand strength.
In the longer term, it expects significant revenue growth opportunities as it captures a larger percentage of the $1 trillion in data center infrastructure installed base. This growth will be driven by the shift to accelerated computing and more demand for AI solutions.
Training model complexity, new scaling laws, and test-time computing continue to drive long-term demand sustainability for Nvidia GPUs.
Nvidia highlighted a strong competitive advantage over ASIC solutions. Enterprise AI demand remains strong, and adopting agentic AI will likely drive increased inferencing adoption.
Price Action: NVDA stock is up 0.18% at $140.45 at the last check on Wednesday.
