Investing.com - RBC's investment bank arm has been waiting in the wings to pull the trigger on Nvidia. But an expected pullback in the shares of Nvidia failed to materialize and now the bank has turned bullish, touting the return of "solid growth" for Nvidia's key businesses.
RBC analyst Joseph Moore upgraded his rating on NVIDIA (NASDAQ:NVDA) to overweight from equal-weight and increased his price target to $259 from $217, sending shares of chipmaker more than 4% higher.
Nvidia is well position for growth in 2020, led by a return to solid growth in both key segments, gaming and datacenter, both of which have underperformed for the year amid tough semiconductor environment, added Moore.
Powered by ray tracing software, which boosts computer graphics performance, Nvidia's RTX graphics cards "should generate more gamer enthusiasm in gaming products, and new data center workloads around conversational AI," leading to "further data center growth," the Wall Street bank said.
RBC has not always been Nvidia's biggest fan over worries that the chipmaker's short-term fundamentals could not back up its lofty valuation, as shares have surged by about 65% for the year.
"The stock is expensive on near-term earnings, and we have held back as we thought that January quarter consensus was overly optimistic (which it did prove to be), but obviously that didn't give us the pullback/entry point that we had hoped for; we see upside from here," RBC said. "All semiconductor stocks are at a premium multiple on 2020 earnings, but across the group we see Nvidia as having one of the best opportunities to maintain a high multiple as we shift to 2021."