Jensen Huang

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Nvidia’s strong third-quarter results are foreshadowing continued outperformance over the next year, Bank of America analysts said in a recent note.
The team led by Vivek Arya lifted its price target on Nvidia shares to $665 from $650, implying a 24% rally from Thursday’s closing level.
Demand for Nvidia’s chips “remains strong across some of the most desirable end-markets in semis,” including gaming, artificial intelligence, and cloud computing, the analysts said.
Bank of America expects Nvidia’s earnings to grow 2% in 2021 and nearly double their 2020 levels by 2025.
Watch Nvidia trade live here.

Nvidia’s industry-leading growth through 2020 sets the chipmaker up for continued gains in the new year, Bank of America analysts said in a note.

The semiconductor producer reported third-quarter results on Wednesday that beat estimates for earnings and sales. Revenue soared 57% from the year-ago period, and its computing and networking arm saw sales more than double to $1.94 billion.

Yet shares slid when trading opened on Thursday as investors balked at a forecasted decline in current-quarter data-center sales.

Those who dumped shares failed to see the chipmaker’s long-term trajectory, the team led by Vivek Arya said. The company’s 37% year-over-year organic sales growth exceeds that of industry peers, and 4% EBIT growth in 2020 lands in the top two among semiconductor stocks, the analysts highlighted.

Bank of America lifted its price target for Nvidia to $665 from $650, implying a 24% rally from Thursday’s closing level. The team reiterated a “buy” rating for the shares.

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The company’s 2020 outperformance will spill over into the new year, the team said. Demand for Nvidia products “remains strong across some of the most desirable end-markets in semis” including gaming, artificial intelligence, and cloud computing, according to the bank.

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In taking more market share in the rapidly expanding sector, Nvidia’s profits are forecasted to grow 2% through the next calendar year. By 2025, earnings per share will have nearly doubled their 2020 level, the analysts added.

The bank’s rosy outlook isn’t without its risks. Encouraging COVID-19 vaccine progress already prompted a mass shift of investor capital to value stocks from growth names earlier in the month. Continuation of the trend could pull more cash out of Nvidia, the analysts said.

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The company’s purchase of ARM from SoftBank also presents a challenge. The deal hinges on authorization from Chinese regulators, and the tense geopolitical environment could throw a wrench in approval, Bank of America said. Increased competition from other internal production efforts at major customers might present a hurdle down the road, the team added.

Nvidia traded at $530.68 per share as of 12:30 p.m. ET Friday, up 128% …read more

Source:: Business Insider

      

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