A Wall Street analyst pounded the table for Nvidia (NVDA) on Friday, suggesting that its shares could rise 50% from current levels thanks to its dominance in processors for artificial intelligence.
Evercore ISI analyst C.J. Muse said Nvidia’s deep learning platform is “nearing a tipping point” in usage. He reiterated his outperform rating and raised his price target to 400 from 300.
Nvidia stock jumped 5.1% to 281.02 on the stock market today. It broke out of a flat base with a buy point of 269.30 on Aug. 23. It hit a record high of 285.22 on Sept. 4. Nvidia stock was unable to hold its gains in the weeks that followed, but it surged back into the buy zone Friday.
Muse raised his price target on Nvidia stock Friday after three days of meetings with company executives this week.
Platform Approach To Artificial Intelligence Hailed
Nvidia is creating an industry standard for artificial intelligence systems, Muse said. Its platform approach includes processors and software. He compared Nvidia’s AI platform to what Intel (INTC) did with x86 processors for PCs and ARM did for mobile processors.
“This platform approach advantage is amplified by Nvidia’s creation of THE AI standard through CUDA and the significant developer lock-in that comes along with that,” Muse said in a report to clients. CUDA is a parallel computing platform and application programming interface model created by Nvidia.
Nvidia is building a competitive moat around its AI computing business, Muse said.
At the same time, Nvidia has growth opportunities in graphics processors for video game systems, a traditional key market for the company, Muse said. Longer term, Nvidia should benefit from computing systems for autonomous driving, he said.
Muse predicted that Nvidia’s revenue will grow to about $23 billion in 2021, compared with $9.7 billion last year. He sees gross margins rising to 65% in 2021 from 61% in 2017. Earnings per share could hit $15 in 2021, he said.