The impact of artificial intelligence (AI) on the tech world since the beginning of last year is undeniable Nvidia (NASDAQ: NVDA) was among the main beneficiaries. The company’s graphics processing units (GPUs) provide the computing power that underpins AI, propelling its stock to greater heights, resulting in a high-profile stock split.
In a keynote address last weekend ahead of the Computex trade show in Taiwan, CEO Jensen Huang laid out Nvidia’s plan for the coming years, making one Wall Street analyst even more optimistic.
Without AI you can’t spell a win
bank of America Analyst Vivek Arya called Nvidia a “top pick,” reiterated his buy rating on the stock and raised his price target to $1,500. That represents potential gains for investors of 37% over the next year compared to the stock’s closing price on Friday.
“Our business has a one-year rhythm,” Huang said. “Our basic philosophy is very simple: build the full scale of the data center, break down the parts and sell them to you at a yearly pace, and push everything to the limits of the technology.”
The analyst noted that with this statement, Nvidia is essentially accelerating its product upgrade cycle from two years to one year. This will “continue to strengthen Nvidia’s AI leadership position,” Arya said.
The evidence suggests the analyst is on to something. During his keynote, Huang said Nvidia plans to unveil a Blackwell Ultra processor in 2025, with the next-generation Rubin platform due in 2026. The first Blackwell processors are expected to ship later this year, replacing the wildly popular generative Hopper AI. potato chips.
This relentless pace of innovation gives Nvidia an edge over the competition. In fiscal 2024 (ending January 28), the company spent nearly $8.68 billion – more than 14% of total revenue – on research and development. This has helped Nvidia maintain its significant technological lead over its rivals, which shouldn’t change anytime soon.
Nvidia shares are selling for 42 times forward earnings, a premium that supported triple-digit revenue growth, making the stock a buy.
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Bank of America is an advertising partner of The Ascent, a Motley Fool company. Danny Vena has positions at Nvidia. The Motley Fool holds positions in and recommends Bank of America and Nvidia. The Motley Fool has a disclosure policy.
Will Nvidia stock go to $1,500? 1 Wall Street analyst thinks so. was originally published by The Motley Fool
