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Nvidia’s AI Dominance: A Soaring Stock with 26% More to Gain, Says Bank of America

The tech world has been in awe of Nvidia’s stunning year-to-date rally, with the stock surging by a whopping 167%. And yet, there’s still more room for growth – a further 26% rise, to be precise – according to Bank of America’s recent analysis.

Their note on Tuesday retained a ‘Buy’ rating for Nvidia and upped the price target from $450 to a staggering $500. This optimistic outlook follows Nvidia’s recent product launch spree, including an AI supercomputer that strengthens its leading position in the fiercely competitive AI arena.

Bank of America noted, “Key product announcements at Computex only further bolster Nvidia’s AI position, benefitting from early-mover advantage and strong execution.”

The bank drew attention to Nvidia’s progress with its H100 and HGX H100 servers, which are now in full-scale production and selling for over $45,000 on eBay. These powerful chips help support large language models like OpenAI’s ChatGPT and Alphabet’s Bard.

Among other launches, Nvidia rolled out the DGX GH200 AI supercomputer, which packs up to 256 GH200 Superchips. The first mega-cap tech companies expected to utilize these chips are Microsoft, Meta Platforms, and Alphabet.

The secret to Nvidia’s success, according to the bank, lies in its full-stack platform that merges the necessary hardware and software for generative artificial intelligence. This integrated approach has transformed Nvidia into a ‘data center powerhouse’, as businesses integrate the firm’s GPU hyperscaler chips into their infrastructures.

Nvidia’s growing influence can also be seen through its partnership with over 1,600 generative AI startups. And Bank of America believes this is just the beginning.

“We believe we are only at the start of the story. Only ~15% of cloud servers are accelerated today, becoming more essential as GPUs are required for proper training of LLMs,” the bank noted.

Nvidia’s networking capabilities have been significantly boosted by its 2020 acquisition of Mellanox. This addition to their portfolio could help Nvidia better capitalize on the high-growth opportunities in AI. On top of this, Nvidia’s gaming business is predicted to see a seasonal boost in the latter half of the year.

Looking forward, Bank of America sees Nvidia potentially generating an EPS of $20 in the long-term, a dramatic increase from their sub-$2 earnings per share over the past year. This estimate showcases Nvidia’s immense growth potential.

In conclusion, Bank of America states, “Nvidia [is] uniquely positioned with a full-stack of AI silicon, software, scale, supply and developer ecosystem to transform the nearly $1 trillion traditional data centers market.” As such, this exciting narrative continues to keep the eyes of entrepreneurs and investors firmly fixed on Nvidia.