Nvidia investors have experienced a rollercoaster ride this year with the AI chipmaker’s stock soaring as much as 174% in 2024 due to the increasing adoption of generative AI. However, this surge has been accompanied by significant volatility, leading to questions about the sustainability of Nvidia’s growth.
In the midst of this uncertainty, one analyst, Frank Lee of HSBC, stands out with an optimistic outlook on Nvidia’s future. Lee not only reiterated his buy rating on Nvidia stock but also raised the price target to $145. This adjustment suggests a potential 14% upside for investors from Tuesday’s closing price.
Lee’s confidence stems from his projection that Nvidia will reach $30 billion in sales for the fiscal second quarter, with revenue expected to climb to $33-36 billion in subsequent quarters. He acknowledges the ongoing investments in data center upgrades, primarily driven by the high demand for generative AI, which bodes well for Nvidia’s future.
The analyst’s bullish sentiment is further supported by the commitments of major cloud infrastructure providers like Amazon Web Services, Microsoft Azure, and Alphabet’s Google Cloud to escalate their capital expenditure spending to meet the rising AI demand. As Nvidia is a key player in AI processing, it is poised to benefit significantly from this trend.
Lee’s thorough research indicates that Nvidia’s revenue could surpass $125 billion in fiscal 2025, doubling its earnings from the previous year and marking another year of triple-digit growth. With its strong partnerships and competitors reporting robust sales, Nvidia is positioned for success in the AI market.
Given the analyst’s insights and the positive industry trends, investing in Nvidia stock at the current valuation seems like a compelling opportunity.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Danny Vena has positions in Alphabet, Amazon, Microsoft, and Nvidia. The Motley Fool has positions in and recommends Alphabet, Amazon, Microsoft, and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
