Nvidia Corporation NVDA shares are trading at record high levels on Thursday.
The Nvidia Analyst: Well Fargo Securities analyst Aaron Rakers reiterated an Overweight rating on Nvidia and bumped up the price target from $245 to $320.
The Nvidia Thesis: NVIDIA Omniverse is a key enabler/platform for the development of the Metaverse across a wide range of vertical apps—industrial, manufacturing, design & engineering and autonomous vehicles/robotics, Rakers said in a note.
Nvidia's Omniverse, the analyst said, is an open virtual platform that allows creators to collaborate in real-time physically accurate simulations/3D renderings. The key technology powering Omniverse is Nucleus, a database engine that allows client applications to share and modify 3D assets and scene descriptions.
Omniverse Enterprise subscription starts at $9,000 per year for a workgroup of two creators, 10 reviewers, and 4 Nucleus subscriptions.
"NVIDIA Omniverse Enterprise represents a significant platform expansion strategy for NVIDIA, which also entails a deepening recurring software story," Rakers said.
Metaverse could present Nvidia with a $10 billion incremental market opportunity over the next five years, the analyst said. The company views Omniverse as a key pillar of future growth for both its AI and HPC strategies.
Long term, Wells Fargo thinks the market opportunity could be even greater as digital assets and digital twins become significant economic drivers. Nvidia could also benefit materially from the significant compute needed to power the Metaverse, with AI-assisted design and parallel computing at the forefront.
Nivida's pricier valuation is justifiable, given an expanding platform story, which includes an expectation of increasingly visible recurring subscription software revenue contributions, Rakers said.
The company is expected to officially launch the GA of Omniverse Enterprise next week at GTC 2021.
NVDA Price Action: Nvidia shares were jumping 11.4% to $296.38.
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