Why Nvidia Analysts Reaffirm Bullish Stance And Hike Price Targets Following Blowout Quarter; 'Path to $1 Trillion Club Evident'

NVIDIA Corporation NVDA announced Wednesday strong quarterly results and guidance, sending the shares of the graphic processor titan up sharply.

The Nvidia Analysts: Rosenblatt Securities analyst Hans Mosesmann reiterated a Buy rating and price target of $400.

Needham analyst Rajvindra Gill maintained a Buy rating and lifted the price target from $245 to $400.

Raymond James analyst Chris Caso reiterated a Strong Buy rating and increased the price target from $225 to $365.

KeyBanc Capital Markets analyst John Vinh maintained an Overweight rating and raised the price target from $260 to $350.

Credit Suisse analyst John Pitzer maintained an Outperform rating and the recently revised price target of $400.

Oppenheimer analyst Rick Schafer reiterated an Outperform rating and $350 price target.

Wells Fargo Securities analyst Aaron Rakers reiterated an Overweight rating and $370 price target.

Mizuho Securities analyst Vijay Rakesh reiterated a Buy rating and lifted the price target from $235 to $335.

Nvidia Theses:

Nvidia One Of Favorite Secular Semi Plays, Rosenblatt Says: Nvidia's third-quarter beat and guidance support the notion of accelerated broad-based demand for data center, enterprise and gaming, Rosenblatt analyst Mosesmann said.

"The narrative is counterintuitive to the bear cycle theme and that is because AI is inflecting into production (inference) and is changing the landscape of compute in ways that historical views of traditional cycles are, well, useless," the analyst said.

Rosenblatt continues to view Nvidia as the best-in-class AI play with several growth vectors on the horizon, including Omniverse, next-generation networking/DPU adoption, autonomous driving software kicker, etc.

"Nvidia remains one of our favorite secular semiconductor plays," the firm said.

Related Link: Nvidia Analyst Hikes Price Target By 30% On $10B Opportunity Presented By The Metaverse

Needham: Lengthy Upgrade Cycle Ahead Supporting Gaming Upside: Only 25% of the current 250 million GeForce installed base is on RTX-enabled, suggesting a lengthy upgrade cycle ahead and more Gaming upside, Needham analyst Gill said.

Data center, the analyst said, is being driven by growth of Inference, as GPU acceleration continues to proliferate in servers, with more processors moving to the Ampere architecture. As of now, only 10% of servers are accelerated, he added.

Nvidia will be the first $1 trillion semiconductor company, given its long-term growth, with the new Omniverse $100 billion software TAM, coupled with the $100 billion hardware data center TAM, and the company's proven, strong FCF generation potential, Needham said.

Nvidia's Growth Not Slowing Anytime Soon, Raymond James Says: Further revenue upside remains limited due to ongoing supply constraints, Raymond James analyst Caso said. Nvidia's management is increasingly comfortable with the supply situation heading into fiscal-year 2023, particularly in the back half of the year, the analyst noted.

The potential for Omniverse and software are large, and Nvidia possesses leadership in these markets, the analyst said.

"Therefore, while NVDA's valuation is elevated, this level of growth can be found nowhere else in the semi space, and we don't see that slowing anytime soon," Caso said.

Data Center Drives Q3 Beat, KeyBanc Says: Nvidia's strong quarterly results were driven by data center strength, which in turn benefited from cloud and enterprise demand, KeyBanc analyst Vinh said.

The management noted it has secured a large amount of capacity from Taiwan Semiconductor Mfg. Co. Ltd. TSM for 2022, the analyst noted. The company expects growth to be led by cloud build-outs of ML/AI capacity, he added.

Nvidia also acknowledged it is seeing regulatory opposition from the U.S., U.K., and EU to the proposed ARM acquisition, but continues to push forward, the analyst said.

Nvidia A Key Enabler Of AI, Credit Suisse Says: Nvidia has become the key enabler of AI with a comprehensive solution that spans silicon, system and software, supporting the largest TAM expansion and value grab opportunity in all of the technology sector, Credit Suisse analyst Pitzer said.

TAM expansion provides ample opportunity to grow into the valuation and a path to over $10 in EPS, the analyst said. Credit Suisse's recently-revised price target of $400 allows Nvidia an entry into the $1 trillion market-cap club, he added.

Nvidia Ideally Positioned For Sustained Structural Growth, Oppenheimer Says: Nvidia casts a wide net in data center AI, supporting some of the most used applications such as image recognition, NLP, recommender systems and metaverse, Oppenheimer analyst Schafer said.

With entrenched A100, CUDA and more than 150 SDKs, the company is positioned to keep dominating data center/cloud AI acceleration, the analyst said.

"NVDA remains the industry leader in high-performance gaming, where supply continues to improve," Schafer said.

The company is Ideally positioned for sustained structural growth, led by data center/AI, he added.

Wells Fargo On What Shares Will React To: Nvidia shares will react to the data center momentum revealed by the company's quarterly results, gaming RTX GPU cycle, purchase obligations and the ARM acquisition regulatory challenges, Wells Fargo analyst Rakers said.

"NVDA's comments reinforced our positive thesis on the company's positioning/strategy to become an enabling platform story for the metaverse," the analyst said.

Nvidia is accelerating the next platform of compute that includes AI/machine learning and metaverse, he added.

NVDA Price Action: Nvidia shares were rallying 8.83% to $318.44.

Related Link: Nvidia Rallies With Key Catalysts Ahead: Wil Chipmaker Be The Next To Join $1-Trillion Club?

Photo: Courtesy Nvidia