Nvidia (NASDAQ: NVDA) Investors have been on a wild ride this year. The artificial intelligence (AI) chipmaker has surged as much as 174% through 2024 as excitement over the rapid adoption of generative AI has gripped both Wall Street and Main Street. With those gains, however, has come extreme volatility as the value of this emerging opportunity remains uncertain.
In recent weeks, the stock has reversed course, falling as much as 25%. Fears about the state of the economy have cast doubt on the staying power of AI and the extent to which Nvidia can grow. The stock has recovered much of those losses, but questions remain.
One analyst believes Wall Street is setting the bar too low.
HSBC says Nvidia is a bargain
HSBC analyst Frank Lee recently reiterated his buy rating on Nvidia shares and raised his price target to $145. That represents a potential upside for investors of 14% from Tuesday’s closing price. The analyst believes Nvidia will report $30 billion in sales for the second fiscal quarter, and generate revenues of $33 billion and $36 billion in the quarters that follow.
The analyst notes that spending on upgrading data centers will continue through 2025, driven by strong demand for generative AI.
The analyst has clearly done his homework. The three largest cloud infrastructure providers, Amazon Web Services (AWS), Microsoft Azure blue, and AlphabetNvidia’s biggest customers, Google Cloud, have all been crystal clear about plans to increase their capital expenditures to meet the growing demand for AI. As the gold standard for AI processing, Nvidia will likely be the beneficiary of a large portion of that spending.
Additionally, the company’s biggest partners and rivals are reporting strong sales numbers, suggesting Nvidia’s results will be robust as well.
If analysts’ calculations are correct, Nvidia’s revenue will surpass $125 billion in fiscal 2025. That’s more than double the $61 billion the company earned last year. It’s the second year in a row that the company has posted growth of more than 10 percent.
That’s why it makes sense to buy Nvidia shares.
Should You Invest $1,000 in Nvidia Now?
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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.
Is Nvidia Stock Headed to $145? 1 Wall Street Analyst Thinks So. was originally published by The Motley Fool
