Nvidia has emerged as a highly scrutinized and anticipated stock, with its performance closely tied to the broader market’s reliance on the AI chip leader. At one juncture this year, Nvidia’s stock was responsible for more than a third of the S&P 500’s gains, prompting some investors to organize watch parties for the company’s earnings releases.
Nvidia’s rapid ascent to a $3 trillion valuation has sparked debate within Wall Street circles, with some expressing skepticism about the stock’s ability to sustain further growth, while others see the ongoing AI boom as a catalyst for continued increases.
This situation has left investors contemplating whether to purchase or sell Nvidia stock at present. Bank of America analysts have weighed in, reaffirming their buy rating for Nvidia and increasing their price target to $190, suggesting a potential rise of 38% from the prior closing price. Should Nvidia shares reach $190, the company’s market capitalization would escalate from $3.4 trillion to $4.7 trillion.
Bank of America remains optimistic about Nvidia’s prospects, characterizing it as a “generational opportunity” with an estimated total addressable market exceeding $400 billion for AI accelerators. According to analysts, there is an ongoing evolution in AI models, with new large language models being launched more frequently, requiring significantly greater computational power for training.
Confidence in Nvidia is bolstered by strong AI demand signals from related sectors, with similar sentiments echoed by executives from companies like Broadcom and AMD. Nvidia’s CEO, Jensen Huang, has also highlighted substantial demand for the company’s next-generation AI chip, Blackwell, which is in full production.
Bank of America further attributes its optimism to Nvidia’s strong enterprise partnerships with firms such as Accenture, ServiceNow, and Microsoft, alongside its robust software offerings that reinforce its leadership in hardware. These factors contribute to a comprehensive Nvidia ecosystem for AI.
Additionally, Nvidia is projected to generate more than $200 billion in free cash flow over the next two years, potentially challenging Apple’s performance. Upcoming earnings reports from tech giants like Microsoft, Google, and Amazon, who are pivotal in AI technology development, are expected to shed more light on market demand, with Nvidia’s report scheduled for November 20.
Despite some Wall Street skepticism about the financial impact of AI investments, the tech industry remains fiercely competitive in its quest for the latest AI advancements. Bank of America notes an increase in the development of new AI models, particularly large language models, which demand enhanced training intensity.
