Benzinga - by Anusuya Lahiri, Benzinga Editor.
Cantor Fitzgerald analyst C J Muse maintained Nvidia Corp (NASDAQ:NVDA) with an Overweight and raised the price target from $140 to $175.
As Nvidia has grown to be one of the largest market cap companies globally (~$3 trillion), the analyst wants to know how much upside the stock has.
Muse acknowledges that he has yet to witness a more torturous pace of technology innovation and subsequent reduction in the cost of computing, as he noted today. This is all driven by Nvidia and its entire system approach.
Also Read: What’s Going On With Nvidia Stock On Tuesday?
These dynamics are causing a strategic inflection in the proliferation of AI today, with no signs of slowing anytime soon, given accelerating product cycles, continued software innovation, and optimizations across the stack.
This allows for a significant scale out of the computing unit, as per Muse. With this rapid pace of innovation, Nvidia is only strengthening its already-robust moat, forcing competitors into playing an ongoing game of catch-up.
Based on the above and Nvidia’s clear technological push at scale, Muse expects the shares to move higher. The stock remains a top pick for the analyst.
The analyst flagged that Nvidia has reported significant advancements in AI performance, boosting capabilities a million-fold over the last decade.
This surge surpasses traditional Moore’s Law improvements, making AI more cost-effective and accelerating adoption.
Nvidia CEO Jensen Huang highlighted the recent developments, envisioning another million-fold increase in performance over the next decade, paving the way for AI ubiquity.
Despite the challenges in quantifying AI ROI, several data points highlight its financial impact. For instance, Muse said that for every $1 spent on Nvidia infrastructure, cloud service providers can earn $5 in GPU hosting revenue over four years.
Similarly, the analyst said that $1 spent on Nvidia H200 servers can generate $7 in revenue from Llama3 tokens over the same period.
Broadly, companies are realizing an average return of $3.5 in revenue for every $1 invested in AI.
The analyst said AI investment is becoming essential for competitive positioning as AI capabilities integrate across all business operations and verticals.
Muse said Nvidia maintains a significant advantage in the AI landscape, extending beyond its top-tier hardware to a robust ecosystem, comprehensive system solutions, and extensive software support. Nvidia’s ability to offer an entire data center solution, from computing to networking and software, creates a seamless customer adoption process and enhances infrastructure performance.
As per the analyst, these strengths create a formidable moat, making it difficult for competitors to penetrate the market.
Nvidia’s continuous innovation and rapid product release cycle further solidify its market position and long-term defensibility.
Based on updated server model analysis, Muse said Nvidia’s Data Center revenues could approach $200 billion by calendar year 2026, doubling to over $400 billion by the decade’s end. This growth is projected to support EPS of $5 in 2026, increasing to $10+ by 2029.
Muse projected second-quarter revenue and EPS of $28 billion and $0.62.
Price Action: NVDA shares traded lower by 2.03% at $123.53 at the last check on Wednesday.
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Latest Ratings for NVDA
| Mar 2022 | Goldman Sachs | Reinstates | Neutral | |
| Feb 2022 | Summit Insights Group | Downgrades | Buy | Hold |
| Feb 2022 | Mizuho | Maintains | Buy |
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