Nvidia gains 12% as Wells Fargo touts platform's Metaverse prospects
Nov. 04, 2021 12:14 PM ET
NVIDIA Corporation (NVDA)
By: Jason Aycock, SA News Editor
Justin Sullivan/Getty Images News
- Nvidia (NASDAQ: NVDA) is 11.6% higher today following a sharp price-target hike at Wells Fargo, which is expecting an upcoming strategy announcement to shore up the chipmaker's approach to the burgeoning "metaverse.
- "The company is set to officially announce general availability of Omniverse Enterprise on Tuesday, at next week's GTC 2021. The highlight of the event will be a keynote address by Nvidia ( NVDA) Chief Executive Jensen Huang.
- "We see Nvidia Omniverse as a key enabler [and] platform for the development of the Metaverse across a wide range of vertical apps—industrial, manufacturing, design & engineering, autonomous vehicles, robotics, etc.," wrote Wells Fargo analyst Aaron Rakers, in a research note. Rakers said Omniverse Enterprise is a "significant" expansion strategy that also plays on Nvidia's ( NVDA) recurring software story.
- Subscriptions to Omniverse Enterprise start at $9,000 a year for a small workgroup of creators. And Nvidia ( NVDA) has outlined a total addressable market of about 20 million designers and engineers who could benefit; Wells Fargo says the Metaverse could mean a $10 billion incremental market opportunity for Nvidia in the coming five years.
- "Long term, we think the market opportunity could be even greater as digital assets and digital twins become significant economic drivers," said Rakers, who raised his price target on Nvidia's ( NVDA) to $320 share from $245, implying a further 8% increase on top of Thursday's gains.Rakers said that more than 50 times its estimated 2023 price-to-earnings ratio, Nvidia's ( NVDA) shares aren't cheap. However, Rakers said the price is "justifiably reflective of a deepening [and] expanding platform story" that includes increasingly visible recurring subscription software contributions to revenue.
- As trading progressed, Thursday, Nvidia's ( NVDA) shares hit a 52-week-high of $299.27 a share, and gave the company a market cap of $738n billion, making the chipmaker the 8th-most valuable company in the world.
seekingalpha.com |
