Nvidia's stock is set to gain, with rivals seen to be in perpetual catch-up mode

MW Nvidia's stock is set to gain, with rivals seen to be in perpetual catch-up mode

By Emily Bary

Nvidia's product cadence, software emphasis and full-system approach help extend the company's competitive moat, according to an analyst

The Nvidia Corp. stock rally has reignited, with the stock heading to a consecutive day of gains after a recent slide into correction territory.

While analysts are a bullish bunch on Nvidia's stock $(NVDA)$ in terms of their ratings - three quarters rate it the equivalent of a buy - they're behind in updating their price targets to account for Nvidia's sizable post-earnings stock gains. But at least two issued target boosts ahead of Wednesday's open, including Cantor Fitzgerald's C.J. Muse, who's now the second most upbeat analyst on the stock.

"We have never seen a more-torrid pace of technology innovation and subsequent reduction in cost of compute as we are seeing today - all driven by [Nvidia] and its full-system approach," Muse wrote, as he lifted his price target to $175 from $140.

Nvidia shares were up 2.4% in Wednesday's premarket action after rising 6.8% in Tuesday's session.

See more: Nvidia's stock storms back to score a rebound not seen in three years

Muse noted that Nvidia's rivals are stuck in an "ongoing game of catch-up," and with the company's "clear technologic push at scale," he expects a further stock ascent.

He talked in big terms as he described Nvidia's market opportunity, which he thinks could shift from being a percentage of data-center spending to a percentage of overall information-technology spending - and eventually a percentage of gross domestic product. That's as the company pushes toward "AI ubiquity."

Read: As Nvidia executives sell stock, here's what investors need to know

Muse added that there are "numerous qualitative examples of AI implementations offering clear [profit-and-loss] benefits" to customers, though he admitted it's not as easy to find quantitative examples since the AI-fueled technological revolution is so new.

Meanwhile, Nvidia boasts advantages through its software, full-system approach, quick product cadence and performance that Muse says reinforce the company's competitive moat.

He has an overweight rating on the stock, which he also deems a "top pick."

Citi Research's Atif Malik boosted his price target as well, to $150 from $126.

He's encouraged about the future potential of "AI agents," which he said are a step up from chatbots because they could make decisions and act in an autonomous fashion. "AI agents when at [the] full potential can drive strong investment by enterprises," Malik wrote.

The trend is notable for Nvidia, in his view, because it could become the next frontier for AI spending, notably in the inference domain, which makes up about 40% of Nvidia's data-center sales.

Don't miss: Nvidia is one of the 'three horsemen of AI.' Here are the others.

-Emily Bary

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June 26, 2024 08:01 ET (12:01 GMT)

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