NVIDIA Corporation NVDA, one of the hottest stocks of both 2016 and 2017, is showing no signs of slowing down heading into 2018 — which could prove to be a busy year for the gaming and emerging cryptocurrency markets, according to Bank of America.
The Analyst
Bank of America's Vivek Arya maintains a Buy rating on Nvidia's stock with an unchanged $210 price target.
The Thesis
The ongoing trends in the $9.7 billion graphics industry should be viewed as "mostly positive" for Nvidia, Arya said in a research report. (See Arya's track record here.)
Four of the trends identified by Arya are:
- Easier comps in 2018 after tougher PC gaming comps throughout 2017.
- Expectations for a 8 percent compounded annual growth rate in units sold and an average selling price CAGR of 9 percent.
- A model which assumes declining spend from crypto miners from 2017's $909 million so any stability would represent upside to the model.
- Expectations for a 38-percent increase in Nintendo Switch consoles shipped in 2018.
An analysis of data from the online gaming community Steam implies a "large upgrade opportunity" for Nvidia next year, the analyst said.
October data shows Nvidia holds a leadership position of at least 80 percent, with the 2017 Pascal generation representing 35 percent adoption among gamers, Arya said. The analyst's survey of top-selling graphics cards also found Nvidia holds 26 of the top 30 slots.
Price Action
Shares of Nvidia were trading higher by around 0.8 percent at the time of publication.
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Photo courtesy of Nvidia.
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