Data Center Sales Could 4x in Five Years Amid Artificial Intelligence Race, BofA Says
02/14/2023
(MT Newswires) -- "Nvidia (NVDA) is positioned to lead the artificial intelligence race among global cloud and enterprise customers and could see its data center sales quadruple in the next five years, BofA Securities said.
The brokerage raised its price objective on the chip maker's stock to $255 from $215 and reiterated a buy rating. A new model predicts Nvidia's sales and earnings could grow at a 25% and 34% compound annual growth rate, respectively, by 2027 as "adoption of generative AI quadruples the addressable (opportunity)," according to the report.
BofA's 2025 and 2027 EPS would be propelled to $9 and $14, respectively, in the "generative AI case," which is 21% and 26% higher than the base case.
The brokerage said generative AI will drive a $62 billion accelerator total addressable market by 2027, six times 2022 levels, with Nvidia expected to maintain at least 65% share, compared with more than 75% currently, as a conservative assumption.
"The emergence of AI could represent one of the strongest upcoming drivers for" semiconductor makers, according to BofA.
While the stock could see some volatility following a 57% jump since the start of 2023 and a "possibly conservative" first-quarter data center outlook, the brokerage expects any pullback in the share price "to be short-lived."
Price: 229.93, Change: +12.05, Percent Change: +5.53" |
