NVIDIA Has Significant Room For Further Gains

While NVIDIA Corporation NVDA shares have outperformed the semiconductor index as well as the broader market by a significant margin in 2016, Argus’ Jim Kelleher believes there still is meaningful room for further gains.

Kelleher maintains a Buy rating on the company, while raising the price target from $95 to $130.

Growth Areas

The analyst believes NVIDIA has “emerged as an investor favorite in 2016, based on its growing presence in transformative technologies including cloud data center, autonomous vehicles, virtual reality, and artificial intelligence.”

The company has been able to limit its operating costs, driving the EPS to grow faster than the revenue.

While data center contributed only 12 percent to the total revenue, this business grew 193 percent year-over-year during Q3:17.

“NVIDIA’s graphics processing technology is well matched to the needs of massive cloud data centers,” Kelleher stated.

Also, the automotive end market grew 61 percent annually, as the company continued to partner with developers of autonomous driving technology.

Further Runway

“Building on its leading market share in visual computing, NVIDIA is positioned for growth in large new markets including ‘immersive’ virtual-reality gaming, artificial intelligence, hyperscale computing and cloud data center, IoT, and robotics,” the analyst went on to say.

Given the impressive Q3:17 results and the Q4:17 guidance being well above consensus, Kelleher believes that the consensus revenue and EPS forecasts were likely to continue to be raised, especially for FY 2018.

At last check in Wednesday's pre-market session, shares of NVIDIA were up 1.95 percent at $119.70.