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Top Analyst Has “Renewed Confidence” in NVIDIA Corporation (NVDA); Here’s Why

One of Wall Street's best performing analysts is out singing Nvidia's praises following a CES management meeting.


A meeting with NVIDIA Corporation (NASDAQ:NVDA) Chief Financial Officer (CFO) Colette Kress and Investor Relations (IR) head Shawn Simmons at the ultimate worldwide tech event of the year CES have left top analyst Rajvindra Gill at Needham with a new tapped well of positivity on this chip maker and its prospects in the self-driving tech playing field.

Not only does Nvidia look good in the self-driving arena, but from where Gill is surveying the bigger picture, this chip giant is making tracks in the driver’s seat at the front of the pack: “We came away from the talks with a renewed confidence that NVDA is the leader in autonomous driving hardware. We also heard positive commentary on gaming and saw no reason to change our expectations of a massive opportunity within Data Centers.”

The Nvidia team showed off the release of its third generation autonomous driving chip Xavier, the “world’s most powerful SoC,” which Gill notes the company deems “two years ahead of the competition.” At ten times the energy efficiency of the chip giant’s last generation chip and running a whole board at merely 30 watts, Gill commends the announcement along with a new alliance with Uber that integrates Nvidia’s hardware in every autonomous training vehicle; a new artificial intelligence cockpit collaboration with Volkswagon; a Baidu and ZF Apollo autonomous driving partnership that positions Nvidia to tap the Chinese market; as well as a fresh 6t inch 4K gaming display. Likewise, Nvidia offered updates for its high-performance virtual gaming machine, GeForce Now.

“While we may see competitors in the high level ADAS market, we believe that full autonomous driving, and likely even ‘hands off’ Level 3 vehicles, will require deep learning. In this regard we believe that NVDA is virtually alone in the autonomous driving training market and best positioned for the onboard computing required for Level 4/5 driving,” highlights Gill regarding the company’s automotive opportunity.

On the Data Center front, the analyst contends, “We believe that customers continue to qualify Volta (Amazon has fully incorporated Volta into its AWS) […] While we note that much of the inference market may remain on CPUs, not only is NVDA entering a new market but the market itself is expected to expand rapidly as many fields such as x-ray imaging/diagnosis are ripe for DL,” with the NVDA team betting on a $14 billion inference market and an $11 billion training market.

As such, the analyst reiterates a Buy rating on NVDA stock with a $250 price target, which implies a just under 12% upside from current levels.

Rajvindra Gill has a very good TipRanks score with a 67% success rate and a high ranking of #30 out of 4,739 analysts. Gill yields 22.6% in his annual returns. When recommending NVDA, Gill gains 29.8% in average profits on the stock.

TipRanks points to a mix between caution and optimism swirling around this tech stock. Based on 23 analysts polled in the last 3 months, 11 are bullish on Nvidia, 11 remain sidelined, with 1 bear running for the hills. Is the stock overvalued or undervalued when taking under account these analysts’ expectations? Consider that the 12-month average price target of $214.85 suggests a 4% downside from where the stock is currently trading.