Nvidia (NASDAQ: NVDA) investors would know that NVDA stock has been on an epic run recently. In fact, it has skyrocketed in the last few years as the company established itself as the dominant force in GPUs, accelerated computing, and AI. Not only that, but the market for generative AI is massive, and it’s actually expected to become a $1.3 trillion market in just 8 years.
It is obvious which company will benefit the most from this explosive growth, and that is the market leader, Nvidia. Many analysts agree that Nvidia has more room to grow even as competition rises from both traditional chipmakers and new entrants because Nvidia has built an ecosystem that is hard to replicate, and this could be just the beginning of Nvidia’s dominance as it looks to define the future of computing. That’s what Melius Research analyst Ben Reitzes wrote in a recent note.
Analyst Bullish on NVDA Stock
In a recent research note, analyst Ben Reitzes of Melius Research offered a positive outlook on NVDA stock. His note basically said “Sometimes a no brainer is a no brainer” as he argued that Nvidia is well-positioned for significant growth due to the increased spending on AI infrastructure by major cloud computing companies. Reitzes points out that companies like Amazon (NASDAQ: AMZN), Meta Platforms (NASDAQ: META), and Microsoft (NASDAQ: MSFT) are rapidly ramping up investments in AI chips for data center projects, and investors following any of these companies would know that he’s absolutely right. Last year, tech giants Microsoft and Meta each spent $9 billion on Nvidia’s AI GPUs, which indicates the great demand for Nvidia’s products.
Another Magnificent Seven member is also very interested in Nvidia’s chips, and that’s Tesla (NASDAQ: TSLA). In the company’s Q1 earnings call, CEO Elon Musk said that Tesla plans on buying around 50,000 H100 chips from Nvidia this year, and since one chip costs around $40,000, this alone could bring Nvidia an extra $2 billion in revenue. Therefore, cloud providers and AI leaders are eager to secure more Nvidia chips, leading Reitzes to believe that the growth trajectory for Nvidia is compelling given its strategic position in both AI and cloud computing.
However, Reitzes acknowledged that NVDA stock may look expensive now, but he contends that Nvidia warrants a premium given that the company’s total addressable market is huge. In fact, Nvidia said in its latest earnings call that the total addressable market for data center chips is expected to grow from $250 billion this year to $500 billion in five years. Reitzes presents a firmly bullish case that Nvidia is a standout opportunity and even called its stock a “no brainer” investment.
Reitzes’ bullish sentiment towards Nvidia is reflected in his decision to maintain a “Buy” rating on the company’s stock while raising his price target to $1,125, up from $1,000. This is a potential 30% rise from Nvidia’s current perch around $864. Therefore, Reitzes is all in on the Nvidia hype train picking up speed. Of course, investors have to wait until May 22 for Nvidia’s earnings to see how it performed for the quarter, but one thing’s for sure, Nvidia’s earnings will be stellar thanks to all the big tech names still buying its chips. Additionally, with the upcoming release of Nvidia’s most powerful chips for AI, the Blackwell chips, these companies will likely keep buying more to get their hands on the newest tech which will help them develop even better AI models.
Nvidia & AGI
The cloud giants are chasing AGI, or artificial general intelligence. It is a software that can reason, think creatively, even attain consciousness like a human mind. AGI would change everything about how we view AI right now, and AI companies like Microsoft and OpenAI are doing everything they can to be able to reach it. However, the computing power required is unprecedented.
That’s where Nvidia swoops in. Its state-of-the-art GPUs are specially designed to handle the intense parallel processing needs of deep learning models, and as the AI workloads grow even more complex on the path to AGI, so too will the demand for Nvidia’s specialized products. Many analysts and investors alike think that Nvidia’s dominance will come to an end as cloud companies like Amazon and Microsoft are now making their own chips, but this is very unlikely because Nvidia’s chips are still the best in the market, and these companies still being Nvidia’s customers even after they developed their own chips proves that.
Also, it might be harder for them to convince their customers to switch to their internally developed AI chips, as most of them would be already used to Nvidia’s platforms. Nvidia is particularly entrenched in the inference phase of AI, where models make predictions on new data. Reitzes argues Nvidia will remain the leader for supporting this demanding real-time inference, given its specialized platforms for AI computation.
NVDA Stock Forecast
As large cloud computing companies increasingly adopt artificial intelligence, their demand for Nvidia’s specialized AI chips will substantially increase, and Nvidia is set to profit greatly from this, especially as it gets ready to launch its most powerful chips for AI, the Blackwell GPUs. Now, we don’t have an official release date for them, but we might have a better idea on when Nvidia’s Blackwell chips will be released.
According to UBS analyst Timothy Arcuri, the Blackwell chips could start shipping in December, which is a little later than UBS’ original assumption of October, with test timelines suggesting late November or December as more likely. That means Nvidia could have a patch of slower growth in the October quarter but that’s not a reason to worry about the chip maker, according to the analyst, because demand for its flagship H100s remains strong. Arcuri maintained a Buy rating on the stock and raised his target price to $1,150 from $1,100.
For Nvidia, the future looks as bright as it can be. That’s the resounding verdict from analysts Ben Reitzes and Timothy Arcuri after their deep dive into Nvidia’s operations. Cloud giants are locked in an innovation sprint, and Nvidia looks set to provide the high-octane fuel. As the industry charges full speed ahead into an AI-powered tomorrow, Nvidia is prepared to benefit thanks to its specialized GPUs. With the likes of Amazon and Google doubling down on AI to stay ahead of the competition, demand for Nvidia’s chips is soaring.
Therefore, for investors scanning the horizon for compelling opportunities, analysts shine a spotlight squarely on Nvidia. The company looks prepared for the AI obsession grips the tech titans and cloud infrastructure.
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