NVIDIA Corporation (NASDAQ: NVDA) stole the spotlight on Friday as its stock received a new Street-high target ahead of earnings.
Loop Capital has commenced Nvidia (NVDA) coverage with a Buy rating and a price target of $1,200, setting a new high on the Street. This bullish outlook comes ahead of Nvidia’s highly anticipated fourth-quarter earnings report for fiscal year 2024, scheduled after market close on Wednesday, February 21.
Analysts at Loop Capital expressed their confidence in Nvidia’s potential, stating,
“Initiating Buy and $1200 PT (63% appreciation) as we believe not only is there material upside to Street estimates in CY2024/FY2025 & CY2025/FY2026 but that we are at the front end of a 3 – 5 year GPU compute & Gen AI foundational build across Hyperscale.”
Analysts recognize the rise of new silicon providers, including private firms and established giants like AMD and INTC. In addition, they anticipate the launch of Hyperscale-specific internal silicon solutions in the coming years.
However, they suggest that the top clients of NVIDIA (NASDAQ: NVDA) will eagerly absorb all offerings from NVDA throughout 2024 and 2025.
Loop Capital Initiates Coverage on Nvidia (NVDA)
Loop Capital’s research indicates a significant shift among Hyperscalers, with projected GPU compute utilization set to increase from 10% to 50-60%. This paradigmatic shift highlights the pivotal role of GPU-based computing in driving forward advanced AI applications, aligning closely with the visionary outlook articulated by Nvidia CEO Jensen Huang.
The analysts said,
“This harkens us back to hues of the internet buildout (Figure 9) where adoption/buildout went up 5x (up to 60% saturation) from 1995 – 2001.”
Analysts have also highlighted a notable increase in IT expenditures among Fortune 1000 corporations in 2024, with generative AI emerging as the principal catalyst.
The anticipated expansion in IT spending is projected at 5-8% in 2024, in contrast to 5% in 2023 and the standard 3-5%, accompanied by a significant surge in infrastructure investment from the usual 30% to 45%.
The analysts indicated that Fortune 1000 companies realize they need to transfer a broad proportion of their data to the Cloud (potentially 60% – 80%, up from previous plans of 30% – 40% and the current 15% – 20%). It is not solely to benefit from Generative AI but also to guarantee their ability to run the essential applications of the future.
NVIDIA (NASDAQ: NVDA) Stock Reaction
NVDA stock declined 0.06% to close at $726.13 on Friday. The traders had exchanged hands with 49,048,994 (49.04 million) shares compared to the average daily trading volume of 44.13 million.
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