Buy This AI Stock Hand Over Fist: Dan Ives Expects It to Soar 52%

Artificial Intelligence (AI) is revolutionizing industries and transforming the way we live and work. As AI continues to gain traction, investors are looking for ways to capitalize on this burgeoning market. One stock that has caught the attention of Wedbush Securities' managing director and senior analyst, Dan Ives, is Nvidia (NVDA). Ives expects Nvidia to soar 52% in the coming year, making it an attractive investment opportunity for those looking to profit from the AI revolution.

Nvidia is a leading provider of graphics processing units (GPUs), which are essential for accelerating complex data center tasks like training large language models and running AI applications. The company's GPUs are widely used in the AI industry, with analysts estimating its market share in AI accelerators to be between 70% and 95%. Forrester Research even goes as far as to say that "without Nvidia's GPUs, modern AI wouldn't be possible."

Nvidia's dominance in the AI market is due in part to its CUDA platform, a robust ecosystem of code libraries and pretrained models that simplifies the development of AI applications. Additionally, the company's full-stack approach to accelerated computing, which includes GPUs, CPUs, interconnects, and networking equipment, provides clients with a superior total cost of ownership.

Ives believes that Nvidia's Blackwell GPU, which is set to launch in the fourth quarter of fiscal 2025, will be a significant catalyst for the company's growth. The Blackwell architecture can complete AI training tasks up to four times faster and AI inference tasks up to 30 times faster than its predecessor, the Hopper generation. This increased speed and efficiency will enable Nvidia to maintain its competitive edge in the AI market.

Another catalyst for Nvidia's growth is the increasing demand for AI infrastructure spending. Ives anticipates more than $1 trillion in AI infrastructure spending in the near term, with Nvidia customers such as Microsoft, Alphabet, Meta Platforms, and Amazon all increasing their AI-related capital expenditures (capex). Nvidia's full-stack approach to accelerated computing, combined with its dominant market share in AI accelerators, positions the company to capitalize on this growing demand.

Nvidia's stock valuation is currently at 55 times adjusted earnings, which is considered reasonable given the company's dominant position in AI accelerators and the upcoming launch of the Blackwell architecture. However, Ives believes that the consensus earnings figure may underestimate Nvidia's earnings by as much as 30% over the next few years. This suggests that Nvidia's stock may be undervalued at its current valuation.

Despite the potential for significant growth, Nvidia is not without its risks and challenges. Competition from other AI hardware providers, regulatory risks, economic downturns, technological obsolescence, supply chain disruptions, and other factors could impact the company's growth. However, Nvidia's strong track record of innovation and adaptation may help it navigate these challenges and maintain its growth trajectory.

In conclusion, Nvidia is a compelling investment opportunity for those looking to capitalize on the AI revolution. With its dominant market share in AI accelerators, full-stack approach to accelerated computing, and anticipated growth catalysts, Nvidia is well-positioned to soar 52% in the coming year. However, investors should be aware of the potential risks and challenges facing the company and maintain a balanced portfolio to mitigate these risks.