Street Calls of the Week
On Tuesday, Piper Sandler reiterated its Overweight rating on NVIDIA shares (NASDAQ:NVDA), maintaining a price target of $150.00. According to InvestingPro data, NVIDIA currently trades at a P/E ratio of 44.4 and has achieved a perfect Piotroski Score of 9, indicating strong financial health. The firm’s analyst, Harsh Kumar, anticipates that NVIDIA could experience a flat to downward trend leading up to its earnings report, scheduled for tomorrow. Kumar attributes potential revenue shortfalls in the April quarter to macroeconomic uncertainties and the impact of the H20 ban. He also notes that the new China-specific chip, expected to be commercialized towards the end of the July quarter, may influence the company’s guidance for July. With a market capitalization of $3.2 trillion and impressive revenue growth of 114.2% over the last twelve months, NVIDIA remains a dominant force in the semiconductor industry. Get deeper insights into NVIDIA’s financial health with InvestingPro, which offers 18 additional exclusive tips about the company.
Despite the possibility of near-term challenges, the analyst remains optimistic about NVIDIA’s prospects for the latter half of the year. Kumar points to strong high-performance computing (HPC) capital expenditure and improving macroeconomic conditions, bolstered by recent announcements of significant deals. These factors, according to Kumar, signal a robust second half for NVIDIA. The company’s financial strength is reflected in its "GREAT" overall health score from InvestingPro, supported by strong cash flows and moderate debt levels.
The analyst advises investors to maintain their positions in NVIDIA stock through the current uncertainties. He suggests that the anticipated negative news might represent the last of such trends for NVIDIA in the current year, emphasizing the potential for a strong rebound. Piper Sandler’s stance indicates confidence in NVIDIA’s long-term performance, encouraging investors to stay invested despite short-term headwinds.
In other recent news, Nvidia is set to release its first-quarter fiscal year 2025 earnings report, which is drawing significant attention from investors. The anticipation is heightened by the company’s recent strategic moves, including the introduction of a new, lower-priced AI chipset for the Chinese market. This chipset is expected to be significantly cheaper than the existing H20 model, with prices ranging from $6,500 to $8,000. Analysts from BofA Securities and Stifel have maintained their Buy ratings on Nvidia, with price targets of $160 and $180, respectively. BofA highlighted potential challenges, such as a $4-$5 billion headwind due to lost sales in China, but remains optimistic about Nvidia’s strategic position in AI deployment. Stifel pointed to Nvidia’s expansion in the UAE and Saudi Arabia as potential growth areas, despite ongoing concerns about export restrictions and margin pressures. These recent developments underscore Nvidia’s ongoing efforts to navigate complex market dynamics while maintaining its leadership in AI technology.
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