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Nvidia Stock: Here’s Why Wall Street Analysts Love It

Posted On January 12, 2018 3:04 pm
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NVIDIA Corporation (NASDAQ:NVDA) is trending after the company stole the show at the CES 2018 by announcing some spectacular products and a deal with Uber. According to the deal, Nvidia will make special chips for Uber’s self-driving cars. Nvidia will use its Xavier chip in Uber cars. Nvidia calls Xavier chips the “world’s most powerful system on a chip”. Xavier is a part of the Drive series of chips of Nvidia. Back in October, the company announced Drive PX Pegasus chip that will be used for “Level 5” autonomous driving, the highest level of autonomy. The best thing about these chips is their tiny size. Given these high-profile collaborations, Nvidia stock is in an admirable position at the moment.

There are now about 320 companies which are using Nvidia Drive platform and chips around the world.  The company recently revealed that Volkswagen is integrating Nvidia’s Drive IX platform into its AV lineup.  Nvidia is making a major foray into self-driving industry. The company is well-aware of the potential of the autonomous driving industry. According to an estimate, there will be over 10 million autonomous cars on the road by the end of 2020. Nvidia will become the market leader in self-driving chips industry. This would result in a revenue stream bigger than GPUs for the company.

Nvidia stock has gained about 51% over the last six months. Several notable Wall Street firms are giving bullish outlooks for Nvidia stock. Earlier this month, Goldman Sachs analyst Toshiya Hari said in a report that Nvidia stock will grow in 2018 as the company has a lot of exposure to several secular growth markets. Hari thinks that Nvidia’s gaming business will thrive due to the advent of Augmented Reality and Virtual Reality technologies. He also predicted that Nvidia will launch Volta chips for gaming in the second or third quarter of 2018. Hari has a price target of $228 for Nvidia stock.

Nvidia’s fundamentals remain strong. In 2017, the company’s operating expenses grew by 24% mainly due to the increased R&D efforts. However, Nvidia offset its expenses due to a 32% year over year growth in its revenues.  Margins also remain healthy. Margins in the gaming business are about 44%, while data center business margins stand at a whopping 75%.

 Related: Here’s Why Micron Will Keep on Gaining in 2018

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