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Nvidia stock has more than tripled in value this year so far.
Justin Sullivan/Getty Images
Nvidia
is racking up price-target upgrades from Wall Street analysts ahead of its earnings report next week. The optimism is based on near-term demand for its chips in the data-center business, orders from Chinese companies, as well as eventual orders from the automotive industry.
Data-center revenue was the key driver for
Nvidia
’s
(ticker: NVDA) earnings beat back in May which cemented it as the key early winner from growth in AI technology. The focus will be on that segment again and analysts at
Piper Sandler
think it won’t disappoint.
“We are expecting NVDA to beat estimates across the board for the July quarter as well as EPS [earnings per share] and revenue expectations for the October guidance,” Piper Sandler’s Harsh Kumar wrote.
He forecasts Nvidia’s data-center revenue to rise 78% in the July quarter from the preceding quarter to $7.6 billion and then climb to $9.5 billion for the October quarter.
Kumar raised his target price on Nvidia to $500 from $450 and kept an Overweight rating on the stock. Nvidia shares were up 0.7% at $442.30 in premarket trading on Wednesday.
Another near-term boost for Nvidia comes from China, where companies are rushing to order the company’s graphics-processing units amid concerns about tighter export restrictions from the U.S. government.
“We feel that as the pressure continues to mount and restrictions on China become more severe in the near term, Nvidia’s backlog will continue to increase as Chinese firms place more orders,” Kumar wrote.
Others are looking for additional demand drivers. Raymond James’s Srini Pajjuri identifies the automotive industry as a source of extra revenue, with Nvidia having struck partnerships with
Mercedes-Benz Group
(MBG.Germany) and
Tata Motors
’ (500570.India) Jaguar Land Rover.
“We see an inflection in 2024 as revenue sharing agreements with Mercedes and JLR begin to ramp (recent comments from Mercedes imply $1-3 billion software opportunity for NVDA by mid-decade),” Pajjuri wrote.
He also raised his target price on Nvidia to $500 from $450 and reiterated a Strong Buy rating. The new target is based on a price-to-earnings multiple of 40 times for Nvidia’s forecast 2025 earnings.
Write to Adam Clark at adam.clark@barrons.com
