Nvidia (NVDA) Is Worth Its Lofty Price, Argues Top Analyst

Cowen's Matt Ramsay initiates bullish coverage on Nvidia angling for 31% in return potential for the stock giant.


Nvidia (NASDAQ:NVDA) shares may cost their fair share for investors to buy into the opportunity, but one of Wall Street’s top performing analysts defends the expense: “it ought to be” this costly for an investment so promising. Top analyst Matt Ramsay at Cowen muses whether the chip giant’s next share driver is in the autonomous arena for a company who likewise has tapped strength in gaming (which continues to bring in stronger upside than anticipated), cryptocurrency, as well as datacenter markets.

Therefore, the analyst initiates an Outperform rating on NVDA stock with a $325 price target, which implies a close to 31% upside from current levels.

Ramsay writes, “We believe NVIDIA’s transformation from a PC-leveraged GPU supplier to a diverse parallel computing company is complete with target markets of gaming, datacenter, prof. visualization and autonomous driving growth – each infused by AI-based computing. While investor focus is understandably on gaming, crypto and datacenter, might the next leg of the story be autonomous?”

“We believe NVIDIA’s auto computing business is on the cusp on significant high-margin growth. In our view, no silicon company has the breadth of solutions and partnerships that NVIDIA has accumulated for end-to-end autonomous driving solutions,” adds the analyst, who sees an upper hand for the company’s automotive computing platform. Additionally, the first key growth driver that could unlock a $4 billion computing total addressable market coupled with a more than $2 billion rising revenue prospect for the semiconductor player is robo-taxis, predicts Ramsay, angling for this in 4 years’ time. In fact, the analyst sees Nvidia’s auto business tripling compared to his already more bullish than consensus expectations in just two years.

“As it stands today, even after several very impressive growth years, F2018’s $1.9B of datacenter revenue is just scratching the surface of management’s recently updated $50B TAM estimate by C2023 […] While we believe this TAM will likely prove aggressive […] if NVIDIA can capture even half of TAM expansion a third this large – growth would prove remarkable,” argues Ramsay, who looks for yet another year under the chip giant’s belt of “unchallenged” AI training this year. Moving forward, the prospects for inference here could welcome in a great deal of upside to the analyst’s datacenter revenue forecast circling $6 billion by 2020.

Matt Ramsay has a strong TipRanks score with a 64% success rate and an impressive ranking of #98 out of 4,798 analysts. Ramsay yields 24.4% in his annual returns. When recommending NVDA, Ramsay garners 146.9% in average profits on the stock.

TipRanks suggests largely positive sentiment is on Wall Street in terms of Nvidia’s prospects. Out of 27 analysts polled in the last 3 months, 19 are bullish on NVDA stock while 8 remain sidelined. With a return potential of 16%, the stock’s consensus target price stands at $286.17.

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