NVIDIA still not updated enough? Experts see two main points

NVIDIA still not updated enough? Experts see two main points (Related News)

NVIDIA (NVDA) has had a great year as it transformed itself from a maker of computer game chips to a leader in artificial intelligence, but for investors, the carnival may be just getting started.

Download Yahoo Finance App

Real-time values ​​of US stocks and foreign currencies

“The potential to monetize income is much greater than investors think,” Bank of America analyst Vivek Arya said on Yahoo Finance’s Open Bid podcast.

“They’re really a system integrator right now,” Arya said. “The products they sell are broad, including all computing, networking, optical components, and space storage. It includes everything.”

The semiconductor analyst’s latest forecast for Nvidia just caused a bit of a stir in the market.

It raised its earnings-per-share forecast for 2024 and 2025, citing expected demand for its new Blackwell chips. Arya said demand for Nvidia’s previous generation AI chip Hopper remains strong. Arya said, as a result of this, Nvidia’s stock price is currently 37 times forward price earnings ratio, which is still cheap.

Arya expects free cash flow of up to $200 billion over the next two years, so the stock also looks cheap on a price-to-cash basis.

Arya believes Nvidia stock has room for at least 40% upside. Shares are up 190% so far this year and are approaching all-time records after an 18% rise in October.

In contrast, competitive AMD (AMD) shares are up just 5% this year as the company disappointed investors in recent weeks with performance specifications for its AI chips.

Meanwhile, Intel (INTC) continues to survive, struggling through layoffs and shoddy products during the worst period in its business history. Shares have fallen 55% this year.

Among the main drivers for Arya’s stability on Nvidia are the upcoming next-generation AI chips – Blackwell Ultra, Rubin and Rubin Ultra. According to Arya’s analysis, these products will begin to hit the market in the third quarter of 2025 (in contrast, it is not so optimistic about Intel).

Arya said that in the US AI infrastructure market, “everyone is competing. ” Arya sees a scenario where OpenAI and Meta (META) and other companies lead the market through open structures, with cloud companies acting as intermediaries. This will only increase the demand for top-notch chips like Nvidia’s.

C3.ai (AI) President Tom Siebel said on a Yahoo Finance program that the demand is real and permanent. “It’s a microcosm of AI as a whole, and this is a long-term trend,” Siebel said. “This is not temporary. This is a big deal.”