Nvidia Adds to Recent Gains with BofA and Goldman Sachs Boosting Price Targets

Even after a 350% rally since the start of 2023, Nvidia stock still offers investors a "compelling valuation" with AI demand in its infancy, according to Bank of America.

The bank increased its Nvidia price target to $800 from $700 last Friday, representing potential upside of 23% from current levels.

"Early days, but results from top US cloud customers suggest solid motivation for spending in Generative AI," Bank of America analyst Vivek Arya said.

Goldman analysts also raised their fiscal 2025 and 2026 estimates for Nvidia's non-GAAP earnings per share by 22% on average to reflect “recent industry data points indicative of robust AI server demand and improving GPU supply.”

"We no longer assume a drop off in Data Center revenue in 2H 2024 and instead model consistent growth through 1H 2025 driven by continued spending on Generative AI infrastructure by the large cloud service providers, a broadening customer profile, and multiple new product cycles," the analysts wrote.

Goldman noted that while it "expect the trajectory of capital spending on Generative AI infrastructure beyond 2024 to remain as the key debate as it relates to Nvidia," the firm is "increasingly confident, particularly given signs of AI monetization, that demand for accelerated computing will continue to grow in 2025."

However, some pessimistic analysts claim that Nvidia is already in a bubble, and "no one knows the true demand for GPUs in the future."Besides, Nvidia reached "deeply overbought" now with a 12-day RSI above 84, signaling potential pullback. Wolfe Research technical analyst Rob Ginsberg cautious about chasing vertical moves in stocks during such times when they are "deeply overbought."

Source: Yahoo Finance, Seeking Alpha