Nvidia is being tipped to impress again next week when it releases second-quarter earnings.
UBS is one of its fans and ahead of the numbers has upped its earnings estimates for the next three years and price target to US$540 (from US$475) against US$437 in the market.
The broker notes that expectations are already sky-high but advises investors to stick with it despite the recent pullback in the stock over the past month.
“Demand will dictate NVDA's long-term AI revenue opportunity, but supply should be the primary determinant for its data center revenue at least through 2024.”
Nvidia is quite literally serving as "kingmaker" as a huge wave of capital and new financing vehicles are chasing new AI software and specialized cloud infrastructure models,” adds the broker.
While enterprises are still very early in a struggle to access enough capacity to build out AI at scale - this likely lasts well into next year, believes UBS.
UBS has upped its earnings per share target to 10.05c (13%) for the year to January 2024, by 41% to 17.2c in 2025 and 42% to 17.7c in 2026.
“Even for more tactical investors, it still seems early to get off this train because year and year comparisons won’t get tough until year-end and the stock has rarely peaked prior to comparisons peaking.”
'Buy' is the investment bank’s rating.