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Nvidia Shares Have More Upside Potential, According to Citi Analyst Atif Malik
Analyst Raises Price Target to $520
Citi analyst Atif Malik has raised his price target for Nvidia shares to $520 while maintaining his buy rating. This new price target implies an upside of 14.4% over the next year, indicating that Malik sees further potential in Nvidia's rally. The stock has already surged over 200% to reach all-time highs this year, driven by increasing excitement about artificial intelligence (AI). Malik's bull case even suggests that the rally could push the stock to $600 per share, representing a 32% gain from Friday's close. While his price target is above the average analyst's projection of $479.22, it does not exceed the highest price target on Wall Street of $767 per share.
Nvidia's Strong Position in the AI Market
According to Malik, Nvidia is considered a clear winner in the AI space, with a market share of over 90% in the AI acceleration market. This market is expected to be valued at around $150 billion by 2027. Malik believes Nvidia has a "substantial advantage" over its competitor, Advanced Micro Devices, when it comes to AI. He emphasizes that it would take competitors multiple generations to match what Nvidia has developed in terms of software. Additionally, Nvidia continues to lead in graphics processing units at both the accelerator and system levels.
Increased Earnings Expectations
In addition to raising the price target, Malik also raised his outlook for Nvidia's earnings per share (EPS) in the upcoming years. He anticipates EPS to be 6% higher than previously expected in the 2024 fiscal year and 38% and 30% higher in 2025 and 2026, respectively.
Potential Risks to Consider
Despite the bullish outlook on Nvidia, Malik acknowledges that stock performance could be impacted by certain factors. These include increased competition in the gaming industry, slower-than-expected adoption of new technology, challenges in the data center or auto markets, or any negative impact from crypto-mining on gaming sales. Malik emphasizes that he sees favorable risk-reward in terms of accelerating year-over-year data center sales, with factors such as the China ban and slower macro impacts on gaming demand and competition as key downside risks in the near to long-term.
Conclusion: Nvidia's Promising Potential and Implications for New Businesses
Nvidia's recent surge in stock value and its strong position in the AI market, as highlighted by Citi analyst Atif Malik, present an intriguing landscape for new businesses venturing into the technology sector. With Malik raising the price target for Nvidia shares and expressing optimism about its future earnings, it becomes apparent that Nvidia's success reflects the growing significance of artificial intelligence.
For new businesses looking to enter the AI market, Nvidia's substantial advantage over competitors, particularly Advanced Micro Devices, is worth considering. Its established dominance and advanced software development indicate that Nvidia possesses the capability to maintain its market leadership in the coming years.
Moreover, with the projected value of the AI acceleration market estimated to reach $150 billion by 2027, there is ample room for new businesses to establish a foothold and contribute to the industry's growth. By aligning with Nvidia's technologies and tapping into the expanding AI market, these businesses could potentially benefit from the increasing adoption of AI across various sectors.
However, new businesses should remain cautious of potential risks around increased competition, slower technology adoption, and challenges in specific markets such as gaming, data centers, and autos. These factors could impact Nvidia's stock performance and subsequently affect businesses associated with the company.
In conclusion, Nvidia's positive trajectory and solid position in the AI market paint an optimistic landscape for new businesses entering the technology sector. By leveraging Nvidia's expertise and capitalizing on the growing demand for AI-driven solutions, new companies have an opportunity to thrive and contribute to the evolving landscape of artificial intelligence. Nonetheless, ongoing analysis and monitoring of market dynamics and potential risks are crucial for the long-term success of businesses venturing into this space.
Article First Published at: https://www.cnbc.com/2023/07/17/dont-expect-nvidias-rally-to-lose-steam-citi-says.html