NVIDIA's Stock Surged Again As Goldman Sachs Lifted The Chipmaker's Target Price

NVIDIA's share price soared again.

On Monday, the already high-priced chip factory hit a historical high in intraday trading, eventually closing up 5% to a high of $693. Moreover, yesterday's surge brought NVIDIA's total market value to 1.71 trillion U.S. dollars, a step closer to surpassing Amazon; it is also six times the market value of its competitor AMD.

Meanwhile, Goldman Sachs, once again, became the behind-the-scenes hero for boosting NVIDIA's stock price.

Yesterday, this international investment bank's analyst raised their target price for the stock, saying that the demand for artificial intelligence in the future and more optimized Graphics Processing Unit (GPU) supply will further enhance the status of this chip manufacturer. The continuous investment in AI infrastructure by governments and tech giants, as well as the further improvement of Nvidia's supply chain, will also drive its revenue to continue to grow strongly.

Therefore, Goldman Sachs reiterated its buy rating for Nvidia and raised its target price to $800 per share. In addition, Goldman Sachs' analysts also increased their estimates of Nvidia's non-GAAP earnings per share for 2025 and 2026 by an average of 22%.

Analysts wrote, We no longer assume a drop off in Data Center revenue in 2HCY24 and instead model consistent growth through 1HCY25 driven by continued spending on Gen AI infrastructure by the large cloud service providers, a broadening customer profile, and multiple new product cycles.

Goldman Sachs pointed out that although they only expect[s] the trajectory of capital spending on Gen AI infrastructure beyond 2024 to remain as the key debate as it relates to NVDA, they are increasingly confident, particularly given signs of AI monetization, that demand for accelerated computing will continue to grow in 2025.

In fact, before Goldman Sachs, Bank of America also raised its price target for Nvidia to $800, saying that AI demand is still in the early stage, and Nvidia has a solid position in the industry with its diversified product portfolio.

Data statistics are also proving that Nvidia indeed has a bright future: According to the forecast of the Semiconductor Industry Association (SIA), the industry will experience a significant rebound this year as global chip demand increases, which will also set a new high for semiconductor sales this year.

The institute stated that in 2024, industry sales will increase by 13%, reaching nearly $600 billion.

Global semiconductor sales were sluggish early in 2023 but rebounded strongly during the second half of the year, a trend we expect to continue in 2024, said John Neuffer, president and chief executive officer of the SIA.

With chips playing a larger and more important role in countless products the world depends on, the long-term outlook for the semiconductor market is extremely strong.

With the pull of the macro environment, analysts predict that by January 2025, this will bring over $90 billion in annual revenue to Nvidia, the industry leader.

It is worth noting that earlier, Indian data center operator Yotta bought 16,000 H100/GH200s from Nvidia for $500 million. In addition to this order, Yotta also bought 16,000 GPU H100s last year, and the total order price was roughly $500 million. In other words, Nvidia has already collected 1 billion U.S. dollars just from this company.

Last month, Meta CEO Zuckerberg and former world's richest man Musk also said they plan to spend billions of dollars to buy Nvidia's popular computer chips to enhance the capabilities of their respective companies in AI research and related projects.

$NVDA(NVDA)