All the hype about AI lately hasn’t hurt at all NVIDIA (NASDAQ:NVDA) Share. The shares are considered extremely well positioned to benefit from this long-term trend and have posted gains of around 110% year-to-date.
With the chip giant’s first-quarter fiscal 2024 (April quarter) results set to be announced after the closing bell today (May 24), Stifel analyst Ruben Roy believes the AI opportunity is about to make itself felt .
“We expect strong results and outlook as NVDA’s data center GPU products continue to attract strong demand from both AI-focused and broader data center demand,” said the 5-star analyst. “While the macro remains choppy, as most data center/enterprise-focused peer group companies demonstrate through C1Q results, NVDA remains the best-positioned component/systems company to benefit from the AI investment cycle in our medium-term view.”
Roy expects Nvidia to post Q1 2024 revenue above the median of its $6,500 million guidance and Wall’s $6,532 million forecast, with the analyst calling for “modest growth in all.” segments”. Roy expects gross margin to come in at 66.5%, in line with the company’s guidance.
Looking further ahead, while Roy is not making any changes to its F2024 estimates, for F2025, in anticipation of stronger growth in its data center segment (up 41% year-on-year versus 25% previously), Roy has increased revenue EPS estimates of previously $35,450 million or $5.65 to $37,835 million or $6.18.
With that in mind, is it time to buy NVDA stock ahead of the latest quarterly statement? Not quite. According to Roy, Nvidia is a victim of its own success as its valuation metrics have risen “well above historical averages.” Although Roy’s price target is raised to $300 from $225, the new target is still just below the current share price of $301. Roy’s rating remains “Hold” (i.e. “Neutral”). (To see Roy’s track record, Click here)
Overall, Roy is joined by six other analysts on the sidelines, but these are drowned out by 26 buys, making the consensus view a strong buy here. However, the average target of $307.37 suggests that even many bulls think stocks have risen enough for now. (See Nvidia Stock Prediction on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is for informational purposes only. It is very important to do your own analysis before investing.