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On Wednesday, BofA Securities updated its outlook on NVIDIA (NASDAQ:), increasing the company’s price target to $1,100 from $925 previously. The company maintains a “Buy” rating on the stock. This adjustment comes in anticipation of NVIDIA’s GPU Technology Conference (GTC) which is scheduled to begin on March 18, 2024.
BofA Securities justifies the new price target by applying a price-to-earnings ratio of 37 times calendar year 2025, up from 31 times previously. This valuation is within NVIDIA’s historical price/earnings range of between 26 and 69 times.
According to the BofA Securities analyst, the raised price target reflects NVIDIA’s growing market potential in the field of artificial intelligence (AI). The upcoming GTC event is expected to highlight several key developments, including the growing influence of generative AI and omniverse/digital twins across various industries.
Additionally, the conference will likely discuss the potential of NVIDIA technology to transform global IT infrastructure, which could represent an annual market of $250 billion to $500 billion over the next three to five years, an increase from the market size previously estimated at $250 billion.
The GTC is also expected to provide updates on NVIDIA’s product portfolio, including accelerators such as the B100 and N100, Ethernet switches, data processing units (DPUs), and cutting-edge AI solutions. Additionally, BofA Securities expects NVIDIA to share new details on the monetization of its recurring software services, such as AI Enterprise, and other offerings such as DGX cloud services, automotive solutions and gaming.
Finally, the company expects NVIDIA to reveal expanded enterprise use cases and growing demand from sovereign entities and on-premises deployments. This outlook suggests that NVIDIA’s technologies are gaining traction across a wider range of applications and industries, which could lead to increased revenue streams for the company.
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