Nvidia (NASDAQ: NVDA) has been experiencing a phenomenal surge in its share price, soaring by an impressive 76% year to date. Despite this remarkable growth, analysts at KeyBanc believe that there is still substantial upside potential for the company’s stock, particularly driven by the continued demand for its data center chips.
In their analysis, KeyBanc delved into Nvidia’s supply chain and identified strong indications of robust demand for Nvidia’s GB200 super chip, which is specifically tailored for artificial intelligence (AI) applications. Encouraged by this insight, KeyBanc maintained an overweight (buy) rating on Nvidia shares and revised their price target upward from $1,100 to $1,200. This new target suggests a potential upside of nearly 38% over the next 12 months, based on the current share price of approximately $871.
One of the compelling reasons to consider investing in Nvidia lies in the remarkable growth of its data center business, which has witnessed over 200% revenue growth in the past year alone. This segment now contributes to more than three-quarters of Nvidia’s total revenue. While sustaining such rapid growth indefinitely may not be feasible, analysts anticipate that Nvidia’s revenue will remain robust in the coming years, driven by the increasing adoption of AI technologies across various industries.
Moreover, Nvidia boasts a robust pipeline of new technologies that are poised to further stimulate demand for its industry-leading chips. Of particular interest to KeyBanc analysts is the anticipated strong demand for Nvidia’s GB200 rack computing systems. These systems, which integrate Nvidia’s Grace CPUs and Blackwell GPUs, are expected to be highly sought after and could command average selling prices ranging from $1.5 million to $2 million.
KeyBanc projects that Nvidia’s GB200 chip could potentially generate annual revenue ranging between $90 billion to $140 billion. This projection aligns with consensus estimates forecasting Nvidia’s total revenue to reach $160 billion by calendar year 2026.
However, it’s worth noting that while Nvidia presents a compelling investment opportunity, investors should exercise caution and conduct thorough research before making any investment decisions. Additionally, unforeseen events that could disrupt the broader semiconductor industry recovery may pose risks to Nvidia’s future performance.
Overall, Nvidia’s strong position in the semiconductor market, coupled with the growing demand for its cutting-edge technologies, positions the company favorably for future growth. With strategic investments and prudent decision-making, Nvidia is well poised to capitalize on the expanding opportunities in the AI and data center markets, driving continued value for investors.