- Evercore ISI says Nvidia's stock could rise 81% if investors realize it's more than just a chip company.
- The company said NVIDIA could transform into an AI ecosystem effort and generate earnings power of $69 per share by 2030.
- “We believe investors are underestimating the importance of the chip + hardware + software ecosystem that Nvidia has created,” Evercore said.
Even after surging more than 200% over the past year, Nvidia stock still has significant upside potential, according to a note from Evercore ISI this week.
The firm opens Nvidia with an “outperform” rating and a price target of $1,160, indicating 36% upside potential from current levels. And in a bullish scenario, Evercore said Nvidia stock could soar to $1,540 next year, an 81% increase from current levels.
Driving this high price target is the idea that NVIDIA is more than just a chip company, but most investors still only see it that way.
“Investors need to understand that 1) the importance of the chip + hardware + software ecosystem that Nvidia has built, and 2) that the computing era will last 15 to 20 years and will typically be dominated by a single vertically integrated ecosystem company. “We believe that the revenue, measured in units of 100, is an underestimate, in the range of 1000 bags,” said Evercore's Mark Lipacis.
The key theory behind Lipacis' bullish claim is that Nvidia has a role in the AI ecosystem and is the clear leader in new computing platforms that will drive efficiency gains for years to come. about it.
“That ‘ecosystem play’ typically captures 80% of the value created in each computing era, but other[s] We're competing for the remaining 20%,” Lipasis said.
Lipacis predicts that Nvidia will capture 80% of the parallel processing market by 2030, valued at more than $350 billion. In such a scenario, by the end of 2020 he will have an earning power of $69 per share, whereas last year's earnings per share of NVIDIA was $11.93.
“The seismic shift to the current era of parallel processing/IoT computing started 5-8 years ago, and while NVDA is a leading ecosystem in parallel processing, we believe it is still only in its early stages of generating significant revenue. Investors,” Lipasis said.
