The rise of artificial intelligence (AI) over the last year has contributed to this Nvidia (NASDAQ:NVDA) a rock star among the Wall Street scene. However, after gaining 224% over the past year (as of this writing), the stock has hit a wall, leading some investors to believe the best gains are already in the rearview mirror.
But at least one Wall Street analyst believes there’s still plenty of upside potential.
Benefit from the AI boom
Bank of America Analyst Vivek Arya reiterated his price target of $1,100 and maintained a Buy rating on the stock. That represents a potential gain for investors of 26% from Wednesday’s closing price. The analyst addressed Nvidia’s selloff, calling it a “refreshing pause” and noting that it was the ninth decline of 10% or more since the end of 2022.
The analyst goes further, saying that Nvidia’s fundamentals are solid and that these periods of consolidation “tend to set the stock up for subsequent strong moves.” He reiterated his opinion that Nvidia is a “top choice.”
The wall of worry
If they look, Nvidia investors can find a lot to worry about. There is a threat of growing competition, inflation and historically high interest rates. These concerns combined could prompt some fair-weather investors to take profits ahead of Nvidia’s next earnings report – but that could be a costly mistake.
I would recommend investors to focus on what we are doing Do knowledge. The development of AI is still in its early stages and adoption is accelerating. Until someone builds a better mousetrap, Nvidia is still the industry leader, and its graphics processing units (GPUs) are the gold standard for machine learning – an established branch of AI – with 95% market share. It is also the GPU leader in data center operations with a dominant share of 95% The Market.
After three consecutive quarters of triple-digit, record-breaking growth, Nvidia is predicting another one. The stock trades at 36 times forward earnings. That’s a slight premium compared to the price-to-earnings ratio of 28 for the S&P 500Given Nvidia’s capabilities, this is an attractive price.
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Bank of America is an advertising partner of The Ascent, a Motley Fool company. Danny Vena holds positions at Nvidia. The Motley Fool holds positions in and recommends Bank of America and Nvidia. The Motley Fool has a disclosure policy.
Nvidia stock is up 26%, according to a Wall Street analyst, originally reported by The Motley Fool