The supply chain crisis is posing difficulties for electronics producers who are reliant on semiconductors. One company that produces the actual components, though, is finding ways to adapt. Nvidia (NASDAQ:NVDA) is noted for its work designing and producing different chips. NVDA stock has been in the green all season but recently, positive analyst comments have highlighted the company’s potential in an emerging and well-publicized market. The way it looks from here, this growing tech player could be on its way to challenging one of the industry’s titans.
What’s Happening with NVDA Stock
Nvidia has been rising steadily throughout the fall, but it caught fire today after an analyst issued a bullish price target, forecasting a bright future for the NVDA stock. Wells Fargo’s Aaron Rankin raised his price target on the stock by 30% from $245 to $320, maintaining an “overweight” rating. Rankin noted that he expects Nvidia to “officially launch the general availability of Omniverse Enterprise” at GTC 2021 next week, a digital AI conference that is free to all. He also cited the potential of the Nvidia Omniverse to serve as key “platform/enabler for the development of the Metaverse.”
That type of positive analyst coverage tends to send stocks shooting up and Nvidia has been no different today. As of this writing, shares of NVDA stock are up more than 12% for the day. Over the past month, though, the stock has climbed by an impressive 43%, moving from less than $200 per share to its current price just below $300. This stock shows no signs of slowing down.
What It Means
Ever since social media giant Facebook (NASDAQ:FB) officially changed its company name to Meta, companies have been working around the clock to enter the Metaverse. We’ve seen these initiatives from Nike (NYSE:NKE) and Microsoft (NASDAQ:MSFT), but a company in Nvidia’s space might actually be in position to challenge Facebook. NVDA is also poised to benefit from the new emphasis on the metaverse that isn’t going away any time soon.
As Rankin emphasized, the metaverse will create opportunities within the areas of manufacturing, design and engineering as well within autonomous vehicles and robotics. An open, virtual platform built for collaboration between creators with physically accurate simulations and 3D renderings, Nvidia’s Omniverse certainly has the power to connect 3D worlds in much the same way Meta is seeking to do. It is powered by Nucleus, the technology based on Pixar’s open Universal Scene Description in which digital assets are defined by a common language.
Why It Matters
Meta may be the company that shifted the world’s focus to the metaverse, but it’s going to have be wary of other companies with competing technology.
October ended with Bank of America increasing its price target for Nvidia and issuing a report in recognized that the smaller company’s Omniverse would perfectly position it to benefit from Meta’s expansion into a field much more dependent on computational computing and AI. There’s little question that this new expansion will prove a significant revenue driver for Nvidia. Depending on how well it is received and how well Meta’s own rollouts go, the former could be a real challenger.
As it stands, the worse-case scenario seems to be that the Omniverse will help send NVDA stock up even further and help cement the company as a player in the race to the metaverse. In the best case, it is able to pose a significant challenge to Meta, a company known for acquiring its competitors. In either case, NVDA is a stock worth watching closely.
On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
