Popular Bank of America (NYSE:BAC) analyst Vivek Arya believes that the stellar cloud business update from Microsoft (NASDAQ:MSFT) and Alphabet (NASDAQ:GOOGL,NASDAQ:GOOG) will have a trickle-down effect on Nvidia (NASDAQ:NVDA) and NVDA stock. In his report, Arya forecasts resiliency in the cloud computing market, despite worries of a resurgence in coronavirus cases in China and other macroeconomic headwinds. Hence, he feels Nvidia and Advanced Micro Devices (NASDAQ:AMD) are also likely to report heartening numbers in their upcoming results.
Microsoft earned an incredible $49.4 billion in sales during the third quarter, mainly due to a 32% bump in cloud revenues. Similarly, Alphabet reported an incredible 43.80% increase in sales from Google Cloud.
Nvidia has been dishing out an earnings and revenue beat consecutively from the first quarter of 2020. The company’s revenue growth on a year-over-year basis is at a spectacular 61.40%. Moreover, its grown its earnings before interest, taxes, depreciation, and amortization (EBITDA) by over 92.73% in the past year. Therefore, the company is in amazing shape to exceed market expectations again in its upcoming quarter.
The cloud could potentially become a major money-spinner for Nvidia in the future. We saw how Meta Platforms (NASDAQ:FB) opted for the company’s GDX A100 systems in building its artificial intelligence Research SuperCluster computer.
Cloud gaming, in particular, has been a major growth catalyst in recent quarters. It currently dominates the space with over 60% market share. Moreover, it continues forming partnerships to increase its outreach with GeForce Now. The service boasts over 15 million users, which continues to grow with every passing quarter.
Therefore, Nvidia stock is likely to soar in value for the foreseeable future. Arya puts a $320 price target on NVDA stock, which is more than a 65% bump from current levels.
Disclosure: On the date of publication, Muslim Farooque 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
