Another 37% increase? Some analysts are already bullish on NVIDIA reaching $1200.

Wallstreetcn
2024.03.12 23:40
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Analysts believe that the company's new growth opportunities may be revealed at the annual GTC conference starting next week, including some of NVIDIA's lesser-known business areas, such as software services and inference applications.

Last Friday, NVIDIA's stock experienced its worst trading day in nine months. However, some analysts have raised NVIDIA's target price from $900 to $1200, indicating a potential 37% upside. Analysts believe that the company's new growth opportunities may be revealed at the annual GTC conference starting next week, including some lesser-known business areas of NVIDIA.

For instance, NVIDIA's software business has already reached an annual revenue run rate of $1 billion. However, for a company with total revenue exceeding $60 billion in the previous fiscal year and expected to easily surpass $100 billion in the current fiscal year, this is just the tip of the iceberg.

Analysts think that NVIDIA's software business is "just getting started" and expect NVIDIA to spend "significant" time at GTC outlining the potential for expanding its software business. They believe that NVIDIA's management team will be most excited about the company's enterprise AI product opportunities.

Furthermore, analysts anticipate that potential inference applications will also be a focus at GTC. NVIDIA previously revealed that at least 40% of the demand for data center GPUs in the past 12 months came from inference. While this surprised many on Wall Street, considering the investments in inference by Meta and Microsoft, it seems reasonable in retrospect.

Analysts stated, "We continue to expect surprises in NVIDIA's market share in the inference market."

NVIDIA is likely to unveil the next-generation data center product, the B100 chip, at GTC, which is expected to offer twice the performance of the H200. Analysts are curious about how customers will handle their old A100 and H100 after upgrading to the B100.

Overall, analysts are excited about NVIDIA's future revenue and profit potential, citing the "clear vision" that GTC may bring. This includes NVIDIA selling out by 2024, clear product cycle support for 2025 (such as B100), and a vibrant ecosystem, "ready for a huge monetization opportunity as we approach the inflection point of generative AI."

Analysts believe that a 10% to 15% growth rate in server business by 2025 is reasonable. If investors perceive that NVIDIA has not yet peaked by 2025, the stock price could reach between $1200 and $1400.

NVIDIA has hinted at the arrival of the next generation of servers. In a previous report by Wall Street News, at the 2024 SIEPR Economic Summit, NVIDIA CEO Jensen Huang revealed that the next-generation DGX AI system will adopt a liquid cooling solution.Morgan Stanley analysts also pointed out in the report that as the computing power of AI servers continues to improve, the adoption rate of liquid cooling solutions (currently at 3%) will increase. Liquid cooling will first be designed in a closed-loop form for cold plates (directly to the chip), then expand to within the rack (TDP 60-70kw), sidecars (2-3 server racks, TDP 200kw), and rows (4-8 server racks, TDP up to 800kw) solutions, as well as upgrades to data center infrastructure.

It is understood that the NVIDIA DGX system is a high-end server solution designed specifically for AI training and inference optimization, providing high computing power. In the future, it will adopt liquid cooling technology to support the next generation of GPUs with even stronger performance.