According to Bank of America, Nvidia could be poised for further growth. Analyst Vivek Arya reaffirmed his buy rating on the chip manufacturer and increased his price target by $25 to $190, indicating a potential upside of approximately 38.8% from the previous Thursday’s closing price. Shares of Nvidia have already experienced a significant rally this year, with an increase of over 176% in 2024. Recent developments in the industry, such as Taiwan Semiconductor’s third-quarter results and Nvidia CEO Jensen Huang’s comments on the high demand for the Blackwell chip, could enhance the company’s competitive edge and generational opportunities.
Arya also pointed to “underappreciated” enterprise partnerships with companies like Accenture and ServiceNow as drivers for further growth. He noted the increasing presence of AI in enterprises, where Nvidia is the preferred partner, with engagements spanning multiple sectors including Accenture, ServiceNow, and Microsoft. Offerings such as AI Foundry, AI Hubs, and NIMs are seen as critical to Nvidia’s AI leadership across hardware and system ecosystems.
The analyst believes Nvidia’s valuation remains “compelling,” with the stock having a forward price-to-earnings ratio of about 48.1, according to FactSet. Looking to the future, Arya anticipates the company could generate at least $200 billion in free cash flow over the next two years, rivaling Apple’s figures and providing growth opportunities. He highlighted that Nvidia’s free cash flow generation is “underappreciated” by the market, with a margin almost double the average of the “Magnificent Seven.” Following Arya’s price target adjustment, the stock rose by about 1% in premarket trading on Friday.
