Shares of Nvidia(NASDAQ: NVDA) surged higher on Monday, jumping as much as 5.2%. As of 11:07 a.m. ET today, the rally had faded somewhat, though the stock was still up 0.5%.
The catalyst that sent the chipmaker higher was increasing confidence in its artificial intelligence (AI) prospects on Wall Street, resulting in a pair of price target increases.
A massive opportunity
HSBC analyst Frank Lee maintained his buy rating on the stock while increasing his price target to $1,050. That suggests potential upside of more than 20% compared to Friday's closing price -- and on top of the stock's 500% gains since the beginning of 2023. The analyst cited Nvidia's expansion beyond graphics processing units (GPUs) into central processing units and software to power its AI-centric processors.
Not to be outdone, analysts at Truist kept a buy rating on the shares, while increasing their price target to $1,177, which would represent potential upside of 34%. The company cited Nvidia's "culture of innovation, ecosystem of incumbency, and massive investment in software, services & models" as the reason for the company's growing lead in AI. The analysts went so far as to call Nvidia "the AI company."
Hosting the "Woodstock of AI"
This growing confidence comes as Nvidia kicks off its annual GPU Technology Conference (GTC) today. The company is expected to unveil the next generation of generative AI-centric products.
The highly anticipated B100 aims to be the world's most advanced and powerful AI processor, and it could double the capabilities of its predecessor, the H100. Investors are waiting to hear from CEO Jensen Huang, who is expected to present the keynote address later today.
This highlights Nvidia's relentless innovation, which has helped catapult the company to the lead in providing processors used for generative AI.
After Nvidia's meteoric rise over the past year or so, investors have begun to wonder if the rally could continue. The stock currently trades for 36 times forward earnings and 17 times forward sales, sending some shareholders to the sidelines.
However, management forecasts triple-digit year-over-year growth in its 2025 fiscal first quarter, which ends in late April. Growth of that magnitude is certainly deserving of a premium, suggesting investors buckle in for the wild ride to come. Nvidia stock is a buy.
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HSBC Holdings is an advertising partner of The Ascent, a Motley Fool company. Danny Vena has positions in Nvidia. The Motley Fool has positions in and recommends Nvidia and Truist Financial. The Motley Fool recommends HSBC Holdings. The Motley Fool has a disclosure policy.
