Why Are Analysts So Bullish about Nvidia?

Nvidia is trading in the green today after the company reported better-than-expected quarterly results on August 19.

“Unassailable” Company

Bank of America said in a report after the earnings that it continues to see a secular momentum for the company, with strong product cycles, including 7nm Ampere in data center and gaming. The bank said that Nvidia is an “unassailable” hardware and software company operating in some of the faster growing markets. These products, the bank believes, can drive sales of Nvidia at a 20% or above rate.

Bank of America has a $520 price target for Nvidia. Among some other notable investment firms upping their price targets for Nvidia include RBC Capital and Needham.

RBC increased its price target for the company to $461 from $528. Needham’s Rajvindra Gill assigned a buy rating to the chips company and gave a price target of $600.

In the fiscal second quarter, Nvidia’s revenue jumped 50% on an annualized basis, while its gaming business revenue totaled $1.65 billion, up 26% and significantly higher than the $1.4 billion revenue estimated by the Wall Street. The company’s results were buoyed as consumers spend more time playing video games during the coronavirus pandemic.

Data Center Business

But Nvidia is not just a gaming chips company now. It has made strong inroads in the data center business. In the second quarter, Nvidia’s revenue in the data center segment surpassed that of the gaming unit for the first time. This shows that Nvidia has successfully diversified its income streams. The company will continue to enjoy a strong growth in the data center business given a rising demand of complex data processing chips for AI and Cloud.