Bank of America has reaffirmed its “Buy” rating on Nvidia’s stock, projecting an additional 26% increase from its current levels. The bank raised its price target to $500 from $450 following Nvidia’s recent launch of a range of new products, including an AI supercomputer that strengthens its position in the artificial intelligence industry.
According to Bank of America, Nvidia’s key product announcements at Computex have further reinforced its AI capabilities, benefiting from its early-mover advantage and strong execution. The company has entered full volume production of its H100 and HGX H100 servers, which are in high demand and currently selling for significant prices on platforms like eBay. These chips play a crucial role in powering generative large language models like OpenAI’s ChatGPT and Alphabet’s Bard.
In addition to server production, Nvidia unveiled the DGX GH200 AI supercomputer, which combines multiple GH200 Superchips. Notably, mega-cap tech companies such as Microsoft, Meta Platforms, and Alphabet will be among the first to gain access to these cutting-edge chips.
Bank of America emphasizes that Nvidia’s success lies in its comprehensive full-stack platform, which integrates both hardware and software for generative AI. This approach has positioned Nvidia as a “data center powerhouse,” with its GPU hyperscaler chips being widely adopted by companies worldwide. The bank points out Nvidia’s partnerships with over 1,600 generative AI startups as evidence of the company’s influence in the field.
While Nvidia has achieved remarkable performance year-to-date driven by AI advancements, Bank of America believes that this is only the beginning. With only approximately 15% of cloud servers currently accelerated, the demand for GPUs for proper training of large language models is set to increase significantly, offering substantial growth opportunities for Nvidia.
Furthermore, Nvidia’s acquisition of Mellanox in 2020 has enabled the company to make progress in the networking space. Expanding its network pipeline could enhance Nvidia’s ability to monetize the rapid growth potential in AI. Additionally, the gaming business is expected to experience seasonal strength in the second half of the year, further supporting Nvidia’s positive outlook.
