Piper Sandler maintains NVIDIA stock Overweight with $150 target

On Monday, Piper Sandler reaffirmed its Overweight rating on NVIDIA stock (NASDAQ:NVDA), maintaining a $150.00 price target. The semiconductor giant, currently valued at $2.79 trillion, has demonstrated remarkable strength with 114.2% revenue growth over the last twelve months. According to InvestingPro data, NVIDIA maintains a perfect Piotroski Score of 9, indicating exceptional financial health. The firm conducted a sensitivity analysis on NVIDIA’s data center revenues to assess potential impacts of a slowdown in capital expenditures over the next year. Their findings suggest that approximately 6.45% of NVIDIA’s total data center revenue could be at risk due to cuts in capital expenditures across the company’s data center end markets.

The analysis took into account a scenario where capital expenditures are reduced and the Chinese market does not make a comeback. Under these conditions, Piper Sandler estimates that NVIDIA’s annual data center revenues could see a potential impact of $9.8 billion. This scenario would also affect the company’s earnings per share (EPS) estimate by roughly $0.40. The firm clarified that their published estimates have already excluded China revenues, following the 8-K report NVIDIA released on April 15, 2023. InvestingPro analysis shows NVIDIA trading at a P/E ratio of 38.55x, with analyst price targets ranging from $100 to $220.

Piper Sandler provided a valuation range based on their worst and best-case scenarios using a 25x earnings multiple, which is considered a trough multiple. In the worst-case scenario, the stock price could fall to $76.25, while in the best-case scenario, the price could reach $126.75. Despite these potential risks, Piper Sandler reiterated their Overweight rating on NVIDIA shares, indicating a positive outlook on the stock’s performance. With a beta of 1.96, investors should note the stock’s higher volatility. For deeper insights into NVIDIA’s valuation and over 30 additional ProTips, consider accessing the comprehensive research available on InvestingPro.

In other recent news, Nvidia’s CEO, Jensen Huang, engaged in discussions with U.S. lawmakers about Huawei’s growing AI capabilities, focusing on potential market implications if Nvidia’s chips face restrictions in China. Nvidia has also announced a significant $500 billion agreement to manufacture advanced AI chips domestically, marking a milestone in U.S. technological production. This development was discussed at a White House event, highlighting the importance of U.S.-based AI infrastructure. Meanwhile, Microsoft (NASDAQ:MSFT) and Meta (NASDAQ:META) reported quarterly earnings that surpassed expectations, leading to a notable rise in their shares. Microsoft’s thriving cloud business and Meta’s optimistic outlook have positively influenced other tech stocks. In contrast, Apple (NASDAQ:AAPL) faced a setback after a federal judge ruled it violated a court order related to its App Store, causing a decline in its shares. Additionally, Nvidia led a decline in the Magnificent Seven stocks, contributing to a pause in the tech rally due to economic uncertainties. This decline was the most significant among the group, which includes other tech giants like Amazon (NASDAQ:AMZN) and Microsoft.

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