After more than a year of soaring momentum, Nvidia's stock price has approached the $1000 mark. Last Friday, Nvidia's stock price hit a historic high of $974 during trading and then fell, while this week Nvidia's stock price has fluctuated in the first three trading days, indicating that the market is somewhat hesitant about the $1000 mark ahead.
Amidst market hesitation, Bank of America released a report on Wednesday Eastern Time, raising Nvidia's target price and firmly bullish on Nvidia's future stock price prospects. Bank of America emphasized that even though Nvidia's valuation has reached the current $2.2 trillion, its stock price is still not expensive.
NVIDIA's stock price trend over the past year
Bank of America firmly raises Nvidia's target price
Bank of America reiterated its "buy" rating for Nvidia in its report and raised its target price from $925 to $1100, which is equivalent to about 24% of the current stock price level.
Bank of America analyst Vivek Arya said:; Quota; Although Nvidia has performed well since the beginning of the year, its valuation and holding weight remain attractive compared to its semiconductor/IT peers& Amp; Quota;
Under the wave of artificial intelligence, Nvidia, as an AI seller, has become the hottest stock of the past year. Since the beginning of this year, Nvidia's stock price has soared by 80%, and has risen by 287% in the past year.
Despite the sharp rise in Nvidia's stock price, the company's valuation is still lower than the valuation of ChatGPT when it was first launched at the end of 2022, as its chips are still in short supply in the AI market and the company's business revenue has achieved astonishing growth.
Arya said, "Nvidia's current trading level P/E ratio is around 37 times NTM PE, while when ChatGPT was launched in November 2022, Nvidia's P/E ratio was 44 times." He added that the historical valuation range of the stock is between 26 and 69 times P/E, and the current trading price is clearly within this range.
At the same time, although most investors hold Nvidia's stocks, their holdings in the stock are still relatively low compared to its weight in the S&P 500 index.
"Valuation and holding levels still show upward potential. Our recent holding analysis shows that although Nvidia is widely held (67% of funds in our survey hold Nvidia), its relative weight (the ratio of investors' holdings in Nvidia to their holdings in the S&P 500 index) is lower than that of large information technology peers (Nvidia 1.01 times, other IT peers 1.13 times)." Although Nvidia's growth potential is nearly 9 times faster than other IT peers Arya said.
GTC Conference or Next Stock Price Outbreak Time
On March 18th, the annual AI global top conference - NVIDIA GTC Technology Conference is about to open, and there may be a follow-up product for its popular H100 chip. At that time, there may be another wave of upward momentum for Nvidia's stock price.
Arya expects that at this GTC technology conference, Nvidia will showcase:
1) Generate the increasing influence of artificial intelligence, Omniverse platform/"digital twin" semiconductor engineering projects in a wide range of end markets;
2) The opportunity to use accelerators to rebuild global computing infrastructure worth nearly $1-2 trillion will result in an annual market size of $250-500 billion (previously $250 billion) over the next 3-5 years;
3) Updates to accelerators (B100, N100), Ethernet switches, DPUs, and edge artificial intelligence.
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