'Don't sweat': Nvidia's recent slide is a 'refreshing noise,' BofA says
Apr. 10, 2024 7:40 AM ET
By: Chris Ciaccia, SA News Editor
 BING-JHEN HONG
Nvidia (NASDAQ: NVDA) shares have declined roughly 11% since the company's annual GTC event last month, but Bank of America said this is nothing new for investors and does not mean the fundamentals have changed.
"While there is always the potential for near-term summer consolidation in NVDA stock (such as we saw from Aug-Dec last year), we believe the fundamentals are solidly on track and periods of consolidation (trading sideways) tend to set the stock up for strong moves later," analyst Vivek Arya wrote in an investor note.
Arya has a Buy rating and $1,100 price target on Nvidia shares.
This marks the ninth time that Nvidia has declined 10% or more for the ninth time since ChatGPT was launched in late 2022.
At current levels, shares are "compelling," trading at 28 times estimate 2025 earnings, with earnings growing at a 40% compound annual growth rate, Arya added.
What, me worry?
The increased chatter of competition is also not a concern Arya explained, particularly from Google's ( GOOG) ( GOOGL) in-house Axion CPUs, which were announced yesterday.
"Since NVDA does not sell any CPU to Google, we see no implication on NVDA, though we do flag a more competitive environment for INTC and AMD," Arya said.
Google's new central processing units are designed to help with tasks such as powering the company's eponymous search engine and AI-related work. (Google also announced an expected refresh of its TPU v5).
Separately on Tuesday, Intel ( INTC) unveiled its Gaudi 3 AI accelerator, which will cost a "fraction" of what Nvidia's H100 chip costs. Even as the company announced some contract wins from enterprise companies such as Dell ( DELL), HP ( HPQ) and Lenovo, there was no mention of any cloud win and as such, Arya believes Gaudi 3 will have less than 1% of the AI accelerator market.
"We maintain our core view that NVDA will continue to dominate the ~$90B CY24 accelerator market (rising to $200B by CY27E) with 75%+ share, followed by 10-15% of the market in custom chips (such as Google TPU, Amazon Trainium/Inferentia, Microsoft Maia and others) and remaining 10-15% spread across other merchant (AMD, INTC, private companies)," Arya said.
"We have seen nothing thus far that changes this view, and indeed NVDA's Blackwell product with its leading training and inference performance, plus NVDA's strong enterprise presence makes us more confident in the company's ability to maintain/gain share." |
