+

Cookies on the Business Insider India website

Business Insider India has updated its Privacy and Cookie policy. We use cookies to ensure that we give you the better experience on our website. If you continue without changing your settings, we\'ll assume that you are happy to receive all cookies on the Business Insider India website. However, you can change your cookie setting at any time by clicking on our Cookie Policy at any time. You can also see our Privacy Policy.

Close
HomeQuizzoneWhatsappShare Flash Reads
 

Nvidia stock could soar 81% if investors recognize its full potential as an AI ecosystem, rather than just a chipmaker, Evercore says

Apr 18, 2024, 02:19 IST
Business Insider
Nvidia, run by CEO Jensen Huang, has soared this year. Here's how to get a job at the red-hot chip company.I-HWA CHENG/AFP via Getty Images
  • Nvidia stock could soar 81% if investors realize that it's more than just a chip company, according to Evercore ISI.
  • The firm said Nvidia has morphed into an AI ecosystem play that could generate $69 per share in earnings power by 2030.
  • "We think investors underestimate the importance of the chip+hardware+software ecosystem that Nvidia has created," Evercore said.
Advertisement

Nvidia stock still has big upside potential even after it's surged more than 200% over the past year, according to a note this week from Evercore ISI.

The firm initiated Nvidia at "Outperform" with a $1,160 price target, representing potential upside of 36% from current levels. And in its bull-case scenario, Evercore said Nvidia stock could surge to $1,540 in the next year, a jump of 81% from current levels.

Driving that lofty price target is the idea that Nvidia is much more than a chip company, but the bulk of investors still only see it as that.

"We think investors underestimate 1) the importance of the chip+hardware+software ecosystem that Nvidia has created, 2) that computing eras last 15-20 years and are typically dominated by a single vertically integrated ecosystem company, whose returns are measured in 100-to-1000 bagger range," Evercore's Mark Lipacis said.

The key thesis behind Lipacis' bullish call is that Nvidia is an AI ecosystem play, and it's the clear leader in a new computing platform that will drive efficiency gains for years to come.

Advertisement

"That 'Ecosystem Play' typically captures 80% of the value created during its respective computing era, while other[s] compete for the other 20%," Lipacis said.

Lipacis expects Nvidia to capture 80% of the parallel processing market by 2030, which could be worth more than $350 billion. In such a scenario, Nvidia would have an earnings power of $69 per share by the end of the decade, compared to the company generating earnings per share of $11.93 last year.

"We believe that the Tectonic Shift to the current Parallel Processing / IoT Computing Era started 5-to-8 years ago, and that NVDA is the dominant ecosystem play in parallel processing, which is only in the beginning phases of generating outsized returns for its investors," Lipacis said.

You are subscribed to notifications!
Looks like you've blocked notifications!
Next Article