There’s good news for Nvidia’s (NASDAQ:NVDA) investors, as NVDA stock just got a price target raise. Not only that, but some big-bank analysts evidently expect Nvidia to emerge as a front-runner in the red-hot generative artificial intelligence (AI) market.
Could the competition in the conversational/generative AI market be described as an “arms race?” That’s actually a fair description. After all, big tech firms like Microsoft (NASDAQ:MSFT) and Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) are involved in this potentially lucrative niche segment.
Yet, Microsoft and Alphabet aren’t the only ones. Bank of America analyst Vivek Arya observes that Nvidia has a “full-stack of accelerated silicon/systems/software/developers.” This positions Nvidia “uniquely to lead the nascent generative AI arms-race among global cloud and enterprise customers,” Arya asserts.
Arya has some forecasts to accompany his position on Nvidia. Per CNBC, the analyst expects Nvidia’s sales and earnings could demonstrate compound annual growth rates (CAGRs) of 25% to 34% “as generative AI adoption increases.” Moreover, “generative AI should increase the total addressable market of [Nvidia’s] accelerator business to $62 billion by 2027.”
What’s Happening With NVDA Stock?
Even while the overall stock market was volatile this morning, NVDA stock held steady and rose 2% to 3% in early trading. Clearly, investors are pleased with Arya’s comments and forecasts about Nvidia.
There’s more to the story, however. Reportedly, Ayra maintained his “buy” rating on Nvidia. In addition, the analyst raised his price target on Nvidia shares from $215 to $255.
That’s a significant price target increase, and it might be enough to boost investors’ confidence in NVDA stock today. Sometimes, price target raises can be self-fulfilling prophecies, as they may prompt traders to buy shares.
Arya did warn, however, that generative AI is in a “requisite hype cycle.” Still, this cautionary note wasn’t enough to dissuade many investors from taking long positions in Nvidia this morning.
On the date of publication, David Moadel 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.
