NVIDIA Corporation (NASDAQ: NVDA) stock rose 2% in intraday trading Tuesday as Evercore ISI initiated coverage with an Outperform rating.
Evercore ISI analysts have initiated research coverage on Nvidia (NVDA), assigning it an Outperform rating with a price target of $1,160. Their analysis positions Nvidia not merely as a semiconductor company but as an ecosystem play.
They argue that computing evolves through distinct eras, with significant shifts occurring approximately every 15-20 years—a phenomenon they term “tectonic shifts in computing.”
Historically, a single company that manages to integrate all aspects of the computing experience has dominated these shifts. Examples include IBM (NYSE: IBM) with mainframes, DEC with minicomputers, Nokia (HE: NOKIA) with feature phones, and Apple (NASDAQ: AAPL) with smartphones.
While the PC era saw a more fragmented landscape, with different companies specializing in chips, hardware, or software, the analysts caution against applying this model when assessing Nvidia. They contend that in each era, the dominant company typically captures around 80% of the market’s value, leaving the rest for competitors. In this context, Evercore ISI sees Nvidia as poised to be a dominant force in the current era.
They also project that investments in such a dominant player can yield exceptionally high returns. These returns often range from 100 to 1,000 times the initial investment. However, they note that “until well after the next computing era has started,” these returns may not fully materialize.
The analysts wrote,
“We believe that the Tectonic Shift to the current Parallel Processing / IoT Computing Era started 5-to-8 years ago. Nvidia is the dominant ecosystem play in parallel processing, which is only in the beginning phases of generating outsized returns for its investors.”
NVIDIA (NASDAQ: NVDA) Stock Price Action
At the time of publication, NVDA stock trades at $874.15, reflecting a 1.64% increase compared to the previous trading session. The traders have exchanged hands with 36,863,198 (36.86 million) shares versus the average daily trading volume of 52.68 million.
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