Nvidia CEO Jensen Huang reacts to a video during his speech at the Consumer Electronics Show in Las Vegas. Rick Wilking/Reuters
Nvidia shares rose four percent on Monday and reached a new record high.
A Goldman Sachs analyst expects Nvidia’s gains could continue into 2025.
The investment bank increased its price target for Nvidia to $800 (€744) on Monday. That means an upside potential of 21 percent.
Nvidia shares have been on a historic high since last year. The semiconductor company’s shares rose 218 percent in 2023. On Monday, Goldman Sachs raised the price target for the US company from 625 to 800 US dollars (converted from 581 euros to 744 euros) – an upside potential of 21 percent compared to Friday’s closing price.
According to the Goldman Sachs valuation, the shares jumped a full five percent on Monday, reaching a record market capitalization of 1.7 trillion dollars (1.6 trillion euros).
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Goldman Sachs expects Nvidia’s high performance to continue until 2025
Goldman Sachs had previously predicted that Nvidia’s data center revenue would collapse in the second half of 2024. Analysts no longer expect that. Sales would increase continuously until the first half of 2025. An effect of “continued spending on generative AI infrastructure by major cloud service providers, new product cycles and broader customer profile.”
Following recent earnings reports from major cloud providers, the investment bank continues to expect Nvidia to benefit from accelerated spending on AI-enabled GPU chips like the H100. “We are encouraged by various data from the broader ecosystem,” Goldman Sachs analyst Toshiya Hari wrote on Monday, “as they point to strong and sustained demand for accelerated computing.”
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“The early signs of AI monetization at companies like Microsoft (Copilot adoption, contributing six percentage points to growth from cloud service provider Azure in the December quarter) and Meta Platforms (increased monetization across Reels, messaging and commerce). “ “The constructive comments on hyperscalers’ AI-related capital expenditures. Meta increased its 2024 capex forecast from $30 billion to $35 billion to $30 billion to $37 billion (from €28 billion to €33 billion to $28 billion to $34 billion). “The Super Micros forecast implies a sequential revenue growth rate acceleration of seven percent in the first quarter to 24 percent in the second quarter.” “AMD’s positive revision of its 2024 sales forecast for GPUs to approximately 3.5 billion dollars (3.3 billion euros). Just three months ago, the company was forecasting $2 billion (1.86 billion euros). “Marvell’s recent positive comments on its optical DSP and custom computing businesses (Goldman Sachs revised revenue forecasts for the data center segment “Nvidia reiterated its belief at the Consumer Electronics Show that data center revenue will grow beyond 2024 – a view based on good visibility based on the investment behavior of the major cloud service providers.”
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Nvidia remains “the industry’s gold standard,” says Goldman Sachs
Nvidia is currently confronted with growing competition from AMD, writes Hari. But the semiconductor company will remain “the industry’s gold standard for the foreseeable future.” Nvidia has powerful hardware, complementary software products and a rapid pace of innovation in its favor.
The Goldman Sachs analyst writes that based on information about the supply chain, he expects Nvidia to ramp up production. Production of the next-generation hyperscaler, the H200, is scheduled to ramp up in the second quarter of 2024. The B100 and B40 will enter production in the second half of 2024 and the X100 and X40 will launch in 2025.
“Our recent conversations with companies across the supply chain indicate that GPU manufacturing capacity will increase sequentially in the fourth quarter of 2024, with a possible acceleration of sequential growth in the third quarter of 2024,” says Hari.
Goldman Sachs is not alone in this view, as Bank of America also increased its price target for Nvidia to $800 (€744) last week. The demand for AI is still in its infancy, the bank judged.
Read the original article in English here.
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