Nvidia (NVDA) -) shares jumped higher Monday after analysts at Mizuho boosted their price target on the tech group, citing the potential for it new focus on AI chips to generate around $300 billion in new revenues.
Mizuho analyst Vijay Rakesh said the total market for AI chips, or GPUs, could grow tenfold over the next five years to more than $400 billion, with Nvidia eventually commanding a 75% market share -- even amid increasing competition from server groups such as Amazon (AMZN) -), Google (GOOGL) -) or Tesla (TSLA) -) 'Dojo' -- that could translate into "~$300 billion in AI-specific revenue."
Rakesh added that Nvidia stock could rise to as high as $769 per share, which corresponds to a market value of $1.9 trillion, based on the most-bullish assessment of revenue gains, with a mid-point price of $625 per share by 2027. Rakesh raised his current Nvidia price target by $130, to $530 per share
"With demand for generative AI accelerating, we see significant opportunity for GPU supplier Nvidia ... (and) ... more room to unlock value with solid AI roadmaps accelerating."
Nvidia shares were marked 1% higher in early Monday trading to change hands at $447.31 each, a move that would extend the stock's year-to-date gain to around 207%.
The Philadelphia Semiconductor Index, the chip sector benchmark that tracks the 30 leading semiconductor companies, closed at an 18-month high of 3,712.77 points on Friday, extending its year-to-date surge to around 46.1%, and was up 0.45% in early Monday trading.
Nvidia joined the so-called 'Trillion Dollar Club' last month when its shares topped the benchmark market value threshold following its blowout first-quarter earnings.
Only five U.S. companies -- Meta Platforms (META) -), Amazon (AMZN) -), Apple (AAPL) -), Google (GOOGL) -) and Microsoft (MSFT) -) -- have surpassed the $1 trillion market cap threshold, with the iPhone maker topping that milestone in early August 2018.
Last month, Nvidia said it saw current-quarter revenue of around $11 billion, more than 50% ahead of Wall Street forecasts, with a gross margin of around 70%. That likely equates to earnings in the region of $2.04 a share, nearly double Wall Street's prior $1.07 per share forecast for the quarter.
For the three months ended in April, Nvidia also blew away Wall Street forecasts with a bottom line of $1.09 a share on revenue of $7.19 billion. That result was powered by record data-center sales of $4.28 billion, a 14% increase that Nvidia said was led by growing demand for generative AI and large language models.
Earlier this year, Nvidia CEO Jensen Huang described AI as having reached and "inflection point" as the world's fastest-developing technology after the group unveiled a new AI "supercomputer", known as Nvidia DGX.
The platform allows business customers to access AI-related technology through cloud computing providers such as Microsoft and Oracle ORCL, essentially creating a new market for "AI-as-a-service" to thousands of companies around the world.
That ability to address the new AI investment explosion, sparked in part by the unveiling of the ChatGPT chatbot earlier this year, could put Nvidia in a leadership position within a market that could be worth more than $600 billion.
