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The Nasdaq 100, as monitored through the Invesco QQQ Trust (NASDAQ:QQQ), has notched its eleventh week of gains in the last 12, also setting new all-time records and eclipsing the 17,000-point mark.
Just three weeks into the new year, tech is showing its staying power, with the market continuing to favor the sector. Chip optimism and AI headlines are helping support the sentiment despite some concerns that Fed rate cuts may take place a little later this year.
The surge can be largely attributed to the remarkable performance of U.S. tech giants often referred to as the โMagnificent Seven.โ Additionally, semiconductor stocks and other players in the field of artificial intelligence have played a significant role in driving this growth.
Major tech stocks led the broader U.S. stock market's rebound this week, buoyed by investor optimism surrounding advancements in artificial intelligence and strong consumer demand.
In 2023, NVIDIA Corp. (NASDAQ:NVDA), Meta Platforms Inc. (NASDAQ:META), and Advanced Micro Devices Inc. (NASDAQ:AMD) emerged as the top-performing stocks within the S&P 500, each boasting triple-digit percentage gains.
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Raymond James analyst Srini Pajjuri maintained Nvidia Corp (NASDAQ:NVDA) with a Strong Buy and raised the price target from $600 to $700.
The analyst noted that Nvidiaโs dominant position in Gen AI infrastructure is unlikely to be challenged in the near term.
Pajjuri expects strong double-digit revenue growth to continue on the back of the latest H200 and GH200 GPU ramps in 1H24 (35-60% ASP premium over H100) and upcoming B100 ramps in 2H24.
In addition, the company is expanding its product portfolio to offer compliant solutions for China and other restricted markets, which could help recapture some of the lost opportunity, the analyst flagged.
While a potential pause in customer spending ahead of B100 (โBlackwellโ) architecture presents some risk, AI proliferation across industry verticals and sovereign AI investments should help keep any slowdown temporary and modest, Pajjuri said.
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As per the analyst, any near-term impact from competitive GPUs and in-house solutions should also be modest given the rapidly growing Gen AI demand and the companyโs significant Software moat, especially in public Cloud workloads.
PC Gaming business is faring well, and the analyst found it likely for Nvidia to expand into ARM PC processors to target on-device AI applications.
Pajjuri noted the $15-$20 earnings power in the calendar year 2025, even in case of a temporary 1-2 quarter spending pause by Data Center customers. At ~30x that number, the analyst noted that valuation is already discounting a potential digestion period to a large extent (5-year average P/E 40x).
The analyst projected an FY23 revenue and EPS of $58.83 billion and $11.08. NVDA shares traded higher by 3.43% at $594.91 on the last check at Fridayโs close.
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