According to KeyBanc analyst John Vinh, Nvidia’s data center business is expected to experience significant growth due to the introduction of new AI chips. This comes as Nvidia’s stock has already seen a remarkable increase of over 91% this year, and the upcoming release of the company’s fiscal first-quarter 2025 earnings report on May 22 is anticipated to further boost its performance.
Vinh predicts that Nvidia will report earnings of $5.81 per share on revenue of $25.6 billion for the first quarter, surpassing Wall Street’s expectations. The analyst highlights Nvidia’s strong position in the AI semiconductor market and its pricing power as factors that could drive growth in the current quarter and the second half of the year.
Nvidia’s forthcoming Blackwell chips, set to launch in the third quarter of 2024, are projected to contribute to the company’s revenue growth. Vinh estimates that these new processors, including the B100 and B200 models, could achieve 40% higher average selling prices than their predecessors. With the introduction of the GB200 Superchip combining two B200 GPUs with the Grace server CPU in 2025, Nvidia could reach a data center revenue of $200 billion in fiscal year 2026.
The high demand for Nvidia’s new chips, coupled with the company’s pricing strategy, could drive significant revenue growth in the coming years. Analysts believe that Nvidia’s market share in the AI GPU market is strong, with estimates showing an increase to 97% in 2023 from 96% in 2022. As a result, investors are encouraged to consider buying Nvidia stock, as the company’s potential for earnings growth is on the rise.
Currently trading at 38 times forward earnings, just below its five-year average, Nvidia stock presents a compelling investment opportunity. With projected earnings set to increase by 52% in the next few fiscal years, the company’s strong position in the AI chip market and growth potential make it an attractive choice for investors looking for long-term growth opportunities.
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https://www.fool.com/investing/2024/05/21/why-nvidia-stock-sustain-stunning-bull-run/
