Top Analyst Predicts NVIDIA Corporation’s (NVDA) Data Center Total Available Market Could Spiral to $35 Billion in Just Five Years

Rajvindra Gill sees 30% upside for Nvidia stock on potential earnings horsepower.


Needham analyst Rajvindra Gill spotlights key growth drivers ahead for NVIDIA Corporation (NASDAQ:NVDA) after meeting with CEO Jensen Huang at the GPU Technology Conference held in Munich, Germany this week. The conference also delved into strategic automotive news, but for Gill, Nvidia’s data center business is attracting the buzz, leading him to be even more enthusiastic on the chip giant’s prospects in the coming years.

On the heels of the conference, predicting the world is about to evolve into one “where software will write itself” and artificial intelligence will become “the killer app for GPU,” the analyst reiterates a Buy rating on NVDA stock while hiking the price target from $200 to $250, which represents a 30% increase from where the stock is currently trading.

Between now and 2022, Gill projects a total available market (TAM) for just data center that might one day pose an opportunity of $21 to $35 billion for Nvidia, elaborating, “Admittedly, capturing this TAM will occur over several years and we are mindful of how much of this expectation is in the stock today. However, we are increasing our PT to $250 […] and are arguing that a higher multiple should be applied today on this potential earnings power.”

Gill continues, “Data center business could outpace the gaming segment over the next five years,” which could be a pivotal switch considering gaming present-day comprises of 57% of sales for the giant with data center standing at 19%. For now, the analyst looks for data center to yield $1.7 billion in fiscal 2018, $2.1 billion in fiscal 2019, and $2.8 billion in fiscal 2020 “could prove conservative addressing $30BN TAM.”

The first growth driver for data center from Gill’s eyes points to “Expanding high-performance computing into new markets outside of the traditional niche markets,” as the analyst predicts companies like Lyft or Uber may rely on supercomputers for driving decisions. In a period of five years, the analyst anticipates “100% of those supercomputers will be accelerated.” With other growth drivers like inference (with a TAM of $10 billion to $20 billion) and as well as the training market, where “AI startups will train on GPUs in the cloud,” Nvidia is set to emerge strong in a software-heavy futuristic world.

Rajvindra Gill has a very good TipRanks score with a 70% success rate and a high ranking of #25 out of 4,698 analysts. Gill garners 23.5% in his annual returns. When recommending NVDA, Gill gains 40.8% in average profits on the stock.

TipRanks analytics exhibit NVDA as a Buy. Out of 25 analysts polled by TipRanks in the last 3 months, 15 are bullish on Nvidia stock, 7 remain sidelined, and 3 are bearish on the stock. With a loss potential of nearly 10%, the stock’s consensus target price stands at $174.05.