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UBS stated Nvidia’s eye-popping inventory rally can proceed to $150 per share.
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The financial institution stated current provide chain checks present “exceedingly sturdy” demand for Nvidia’s next-gen chips.
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Nvidia’s potential $5 EPS in 2025 would give it a valuation of 25.6x on a ahead price-to-earnings foundation.
Nvidia inventory’s eye-popping rally is poised to proceed because it advantages from sturdy demand for its next-generation of synthetic intelligence-enabling chips, in line with UBS.
The financial institution raised its 12-month value goal on Nvidia inventory to $150 per share from $120 per share in a be aware on Monday, representing potential upside of 16% from present ranges.
Based mostly on current provide chain checks, UBS analyst Timothy Arcuri stated “demand momentum for Blackwell rack-scale methods stays exceedingly sturdy.”
Blackwell is Nvidia’s next-generation AI-enabled GPU system that may exchange the extremely common H100 chip later this yr. The chip is anticipated to ship vital effectivity features in comparison with the Hopper chipset, and the cloud hyperscalers are hungry for them.
“We now consider EPS of ~$5 could possibly be doable for C2025 because the order pipeline for NVL72/36 methods is materially bigger than simply two months in the past as hyperscaler budgets for C2025 agency up,” Arcuri stated.
If Nvidia does ship on $5 in earnings per share subsequent yr, it might be buying and selling at a ahead price-to-earnings ratio of about 25.6x. Contemplating the corporate’s quick development charge, that might not be a demanding valuation given the S&P 500 trades at a 21x ahead price-to-earnings a number of.
And that is the large disconnect between Arcuri’s estimates and the remainder of Wall Avenue.
Promote-side consensus estimates anticipate Nvidia to ship earnings per share of $3.62 in 2025, which provides it a ahead price-to-earnings a number of of 35x.
“Given all of this, we consider a $150 PT will be supported and we keep our “Purchase” score as we roll our valuation foundation ahead from C2025 EPS to a mean of C2025/C2026,” Arcuri stated.
Additionally boding effectively for extra features for Nvidia is the rising “wall of fear” surrounding the inventory in current weeks. That ought to in the end energy extra features as bearish considerations are transformed to bullish outlooks amid strong earnings outcomes.
“Sentiment on the inventory – although nonetheless sturdy – has light considerably in current weeks, creating extra of a ‘wall of fear’ that ought to be in the end wholesome if our outlook materializes,” Arcuri stated.
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