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Nvidia Stock Climbs On AI-Based Upgrade: Time to Buy NVDA?

Benjamin Rains

Shares of Nvidia NVDA surged over 2.6% Friday after the firm received a substantially higher price target that pointed to the semiconductor company’s strength in artificial intelligence as a major reason to be optimistic. The question for investors is should they consider buying Nvidia stock at the moment?

Upgrade

Needham analyst Rajvindra Gill raised his price target for Nvidia shares from $325 to $350 per share. This new 12-month price target represented a 29% upside to NVDA’s closing price of $271.34 per share on Thursday.

Gill cited Nvidia’s position in AI and machine learning for his new, more positive outlook. “We see striking parallels between NVIDIA's dominance in artificial intelligence / ML and the 'Wintel' platform during the era of PC computing," Gill wrote in a note to clients.

Investors should note that Wintel refers to the dominant position Microsoft MSFT and Intel INTC held in personal computing for decades, where Microsoft built its Windows operating system and Intel built the chips. The Needham analyst also upped his current year earnings outlook to $7.89 per share.

NVDA stock jumped over 2.6% through mid-morning trading Friday to climb as high as $279.10 per share, which is not too far off from its new 52-week and all-time high of $285.22, which it hit recently.

Stock Movement

Nvidia stock has been one of the best performers on Wall Street over the last serval years. Shares of NVDA have skyrocketed over 1,100% during the last three years, which crushes Micron’s MU 167% and the S&P 500’s 46% climb. Over the past 12 months, share of NVDA have soared 54%, topping the S&P’s 17%. Nvidia’s climb does fall behind Advanced Micro Devices’ AMD insane 153% surge.

 

Outlook

Looking ahead, our current Zacks Consensus Estimate is calling for Nvidia’s quarterly revenues to surge 23.5% to hit $3.25 billion. Meanwhile, the firm’s current full-year revenues are projected to jump by 34.1% to reach $13.02 billion. 

At the bottom end of the income statement, the company’s adjusted quarterly earnings are expected to expand by 45.1% to touch $1.93 per share. Nvidia’s fiscal year EPS figure is projected to soar by over 62%.

With that said, NVDA’s earnings estimate revision picture has been very mixed recently, which helps it land a Zacks Rank #3 (Hold). Still, the company looks poised to continue to grow both its top and bottom lines and is ready to benefit greatly from its role in the AI revolution. Therefore, investors might want to consider Nvidia stock at the moment.

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