Goldman Sachs analysts recently reaffirmed their optimistic stance on Nvidia (NASDAQ:NVDA) stock, maintaining a Buy rating while revising their 12-month target price upward from $1,000 to $1,100. This adjustment in the target price coincided with an upward revision in their non-GAAP earnings per share (EPS) estimates for fiscal years 2025 to 2027, reflecting recent industry trends indicating robust demand for AI server technology and improvements in the supply chain.
Despite Nvidia’s strong performance year-to-date, Goldman analysts see further potential for stock appreciation, driven by positive EPS revisions. They note that Nvidia’s current valuation, trading at a relatively modest premium of 35x compared to its coverage universe, represents only a 36% premium relative to its median premium of 160% over the past three years.
Goldman’s bullish outlook on Nvidia is largely fueled by the company’s leadership position in the AI space, which they view as the primary growth driver. They anticipate strong performance in Nvidia’s Data Center segment, fueled by ongoing demand for AI-related computing and networking solutions. Recent product launches, such as the H200 and Spectrum-X, are expected to contribute positively to the company’s revenue growth.
Looking ahead, Goldman Sachs is optimistic about the continued expansion of AI spending beyond 2024, citing projections from chipmaker TSMC. They expect substantial growth in server AI processor revenue, driven by increased investments from Tier-1 U.S. hyperscalers and positive momentum within the AI ecosystem.
Goldman analysts express confidence in Nvidia’s competitive advantage, spanning hardware and software capabilities, as well as its extensive installed base and ecosystem developed over multiple decades. They believe that Nvidia will maintain its leadership position in the market through ongoing innovation efforts and technological advancements.
Overall, Goldman Sachs remains bullish on Nvidia’s prospects, expecting the company to sustain its growth trajectory and solidify its position as a dominant player in the AI and data center markets.