One of the new biggest bulls on Nvidia Corp.'s stock now thinks it packs 34% upside, as it remains a "cheap" way to play the booming artificial-intelligence trend.
Nvidia $(NVDA)$ "is the AI company," Truist Securities analyst William Stein wrote in a note to clients Monday. "Its leading position in parallel compute & AI is owing less to its chips and more to its culture of innovation, ecosystem of incumbency, and massive investment in software, services & models."
Stein upped his price target on Nvidia shares to $1,177 from $911 in his latest report. That new target ranks fourth among those listed on FactSet from analysts who've put out notes in the past month.
Nvidia "is many things," according to Stein, but a pricey stock isn't one of them. "Investors who believe NVDA is expensive should consider this," he wrote: Nvidia's stock trades at 35 times estimated earnings per share for this calendar year, a multiple he deemed "cheap" as it's at the low end of Nvidia's historical valuation range and a sizable discount to high-growth chip peers.
It's also inexpensive when considering Nvidia has the potential to grow earnings at a compound annual rate of more than 100% from calendar 2022 to 2025, Stein added.
He sees Nvidia's stock as the best data-center investment, and he said that part of the company's business gets the most focus these days. Meanwhile, the company can also capitalize on artificial intelligence at the "edge," which he calculated as an $81 billion market.
"Edge AI compute will allow the processing of data where it is observed, sensed, or generated, enabling faster, more secure, more reliable, and less expensive AI inference across a wide variety of devices and applications," Stein wrote in a separate report focused on the market opportunity there. The idea is that people will move to perform more AI tasks on computers and mobile phones, though he notes they've already been doing so for years to an extent.
Nvidia will be "an important vendor for AI at the edge," Stein wrote, though others including Tesla Inc. $(TSLA)$, Arm Holdings PLC $(ARM)$ and Qualcomm Inc. $(QCOM)$ could benefit as well.
Elsewhere, HSBC analyst Frank Lee boosted his price target on Nvidia's stock to $1,050 from $880 in a Monday note. "We are encouraged by Nvidia's AI product roadmap which focuses on moving beyond [graphics processing units] and towards owning the entire value chain," he wrote.
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