Nvidia Has Soared This Year. Now It's Entering 'Beast Mode.' -- Barrons.com
DOW JONES & COMPANY, INC. 5:15 PM ET 5/18/2020
Symbol Last Price Change | NVDA | 350.01 | +10.38 (+3.06%) | | INTC | 59.92 | +1.64 (+2.81%) | | AMD | 54.59 | +0.39 (+0.72%) | | QUOTES AS OF 04:00:00 PM ET 05/18/2020 |
Not every tech stock that has rallied this year is a clear stay-at- home play. Consider, for instance, the graphics-chip maker Nvidia(NVDA), up 44% for the year through Friday.
There are multiple reasons for the ascendance of Nvidia(NVDA) shares, including strong demand for the company's graphics processors from public cloud operators and a positive investor reaction to the company's $7 billion acquisition of the Israeli computer-networking company Mellanox. Demand from the core gamer PC market is still robust.
Nvidia (NVDA) reports earnings for its April quarter on Thursday, after the close of trading, and analysts are getting jazzed. On Monday, BMO Capital analyst Ambrish Srivastava raised his rating on the stock to Outperform from Market Perform, with a target of $425 for the stock price, up from $285. The company, he says, is "entering beast mode."
Shares rallied another 3.1% to $350.01 on Monday, while the S&P 500 was up 3.2%.
"While there is no one single event we can point to which has led us to change our thinking, the continued execution on the data center side, along with the latest product rollout, has helped," he said in a research note. "We believe Nvidia(NVDA) is uniquely positioned to continue to benefit from a massive shift in the compute landscape."
In particular, Srivastava notes that more data-center work is shifting from traditional processors produced by companies like Intel(INTC) and Advanced Micro Devices(AMD) to graphics processors.
"We believe this shift only accelerates as the type and size of workloads that a data center has to be able to address continues to grow and evolve," he wrote. "The workloads range from [artificial intelligence] to data analytics to genomics ...what Nvidia(NVDA) has done with its [graphics processor] along with its software architecture, positions the company uniquely to be the prime beneficiary as we look over the next five years or so. We also believe the acquisition of Mellanox makes Nvidia(NVDA) an even more formidable presence in the data center market."
Deutsche Bank's Ross Seymore Monday morning repeated his Hold rating on Nvidia(NVDA) shares, while raising his target to $300, from $290.
"We expect Nvidia(NVDA) to deliver results [and] guidance that would be strong in normal times, and likely even more impressive in light of the current pandemic," he wrote in a research note. He said, though, that strength is already reflected in the stock's price, which has far outperformed the rest of the semiconductor sector.
Write to Eric J. Savitz at eric.savitz@barrons.com |
