Bank of America has upped its Nvidia Corp price target to $1,100 from $925 ahead of the tech giant's GPU Tech Conference on 18 March.
The new price target is based on a 37-times forward price-to-earnings (PE) ratio, up from 31x previously, to reflect the rapidly growing total addressable market in the artificial intelligence sector.
BoA anticipates the conference will highlight the rising impact of generative AI, omniverse and digital twins across various end markets and the opportunity to re-architect nearly $1-$2 trillion of global computing infrastructure with accelerators.
This development could create a $250-$500 billion annual market over the next three to five years, an increase from the prior $250 billion estimate, reckon BoA analysts.
The conference is also expected to provide updates on Nvidia's product pipeline, including accelerators (B100, N100), Ethernet switches, DPUs and edge AI, as well as monetisation strategies for recurring software (AI Enterprise) and services (DGX cloud, autos, gaming).
Key questions Bank of America hopes to have addressed include:
- The adequacy of grid power for energy-intensive generative AI computing
- The impact of rising competition from custom chips and merchant silicon
- Nvidia's long-term profit model
- Visibility into 2025 sales growth and supply-chain planning
- The planned use of Nvidia's significant cash reserves and
- The potential impact of China restrictions on growth
Bank of America also expects Nvidia to explore TAM expansion opportunities beyond the four largest US hyperscalers, highlighting projects in countries like France, Switzerland, India, Japan, Singapore and others.
Despite Nvidia's stock surging over 85% year-to-date, BofA's analysis suggests there is still room for upside.
Nvidia shares were trading at $892 as of Wednesday, 13 March.