Mizuho analyst Vijay Rakesh is feeling even more bullish on Nvidia Corp.'s stock prospects as he thinks about the artificial-intelligence opportunities ahead of the chip giant.
The company is "dominating" the market for AI servers, he wrote, and while the company could face stiffer competition over time than it does today, Rakesh said he still expects Nvidia $(NVDA)$ to hold on to "significant" share of the market. In doing so the company could unlock $300 billion in AI-related revenue by 2027, he estimated.
Nvidia's AI revenue opportunity this year could be $25 billion to $30 billion, Rakesh noted, based on his expectation that the company will ship about 100,000 AI units this year at average selling prices of $250,000 to $300,000. Even though average selling prices could fall to $200,000 or so by 2027, Rakesh said he sees the potential for a massive uplift in unit sales as the company could ship 1.5 million AI servers by that point.
Though Nvidia shares have jumped 200% so far this year, Rakesh said he thinks they can run higher still. He boosted his price target on the stock to $530 from $400 and said that the new target is "conservative."
AI could come to bring a much bigger windfall for Nvidia shares than that target implies. With "an incremental $20-$300/share of AI value still to be unlocked," that suggests "a potential NVDA value/share at $486-$760," Rakesh wrote Sunday, while reiterating his buy rating.
He also lifted his price target on neutral-rated Intel Corp. shares $(INTC)$ to $33 from $30 in his latest report.
Intel "could see some incremental revenue from the AI revolution, but with growth more muted" than competitors Nvidia and Advanced Micro Devices Inc. $(AMD)$, he wrote.
Rakesh left his buy rating and $140 price target intact on shares of AMD.